BSE seeks reduction in securities transaction tax

To attract more investors into the stock market, leading bourse BSE has pitched for reduction in the securities transaction tax (STT) and rationalise the taxation norms for different financial products - a demand also made by Sebi and other market entities. BSE has written to the government on this.

"If you cannot reduce the STT overall, you have to restructure STT to basically reduce it for delivery transactions," BSE's Managing Director and Chief Executive Officer Ashishkumar Chauhan said on Wednesday.

According to him, STT should be reduced for delivery transactions as it would also help attract investments.

Chauhan said at present, the tax was "lowest on options and highest on delivery transactions". So, effectively the tax policy itself seems to promote derivatives transactions.

"Currently it is Rs 20,000 a crore... Rs 10,000 a crore on the buy (side) and Rs 10,000 a crore on sell (side) if you deliver the shares. It is almost 20 times higher than intra-day trading or future trading or probably 1,000 times higher than the options trading," he said. The National Stock Exchange has also put across similar demands with regard to STT.