SAT says NSE circular on tax has 'ambiguity'; asks CBDT to provide clarity

The Securities Appellate Tribunal today said there is "ambiguity" in a circular issued by the National Stock Exchange regarding the quantum of securities transaction tax to be levied on stock derivatives and asked the CBDT to provide clarity on the issue.

The matter pertains to the circular, dated July 17, wherein the exchange said that it would levy a STT at 0.10 per cent on the settlement price to be paid by the purchaser of the futures contract which are settled by way of physical delivery effective from July 26.

Besides, the bourse would have the right to recover such additional STT from the members effective from the date as may be notified by the Central Board of Direct Taxes (CBDT).

The tribunal's order has come on a plea filed by the Association of National Exchanges Members of India (ANEM) against the circular.

"Given the ambiguity the circular has generated and the potential adverse effect it would have on the securities market it is in the interest of justice for CBDT to consider the matter on top priority and provide clarity in the matter" SAT Member C K G Nair said in the four-page order.

Representations seeking clarification have already been made by the NSE and the Sebi to the CBDT.

"Further appellant is at liberty to approach the appropriate forum urgently for seeking remedy against the impugned circular at the earliest," it added.

The ANEM argued that there is ambiguity in the circular and need clarity regarding the STT rate.