Stock exchanges today pitched for abolition of the Securities Transaction Tax (STT) on equity trades at their meeting with Finance Ministry officials here.
The issue of removal of STT was raised by representatives of different stock exchanges, including BSE, National Stock Exchange, MCX-SX and USE. Besides, the officials of market regulator the Securities and Exchange Board of India (Sebi) were also present in the meeting.
"Finance Ministry has taken our view on developments in stock markets and STT. We have suggested removal of STT. Based on our view the ministry will take a view," a representative of a stock exchange said.
"We are expecting some announcement in budget. We also stressed that taxes should not be increased and no new taxes should be introduced," an official from another stock exchange said.
Earlier in the day Sebi Chairman U K Sinha too met Finance Ministry officials.
The government had introduced STT in 2004 on transactions in different types of securities. The rate presently varies from 0.025 per cent to 0.25 per cent depending upon the type of security traded and transaction -- whether sale or purchase.
The government collects around Rs 7,500 crore per annum from STT and it would be difficult for it to forego the revenue at a time when efforts are needed to raise revenue and bridge the fiscal deficit, which during the current fiscal is likely to exceed the budget target of 4.6 per cent of the Gross Domestic Product (GDP).
The discussions are aimed at providing inputs to the budget for 2012-13 which will unveiled by Finance Minister Pranab Mukherjee on March 16.
The Capital Markets division of the Finance Ministry has been pushing for lowering of STT as it would boost investor sentiments.
The stock exchanges, however, are seeking removal of the levy as it would reduce transaction cost, promote equity culture and encourage retail participation.