The National Stock Exchange (NSE), the largest bourse in the country, has pitched for a reduction in taxes levied on capital market transactions, in a bid to increase the attractiveness of the domestic market.
Speaking at an event to celebrate the exchange’s 25th anniversary, Vikram Limaye, managing director and chief executive officer, NSE, said several taxes, including the securities transaction tax (STT) and the goods and services tax (GST), are hurting investor participation.
“Incidence of multiple taxes — from the STT, the capital gains tax, stamp duty, and the GST — on capital market transactions is affecting the competitiveness of Indian markets compared to peers. A streamlined tax structure would significantly enhance the attractiveness of our markets and wider participation would enhance liquidity across securities,” Limaye said.
He was sharing the stage with Finance Minister Nirmala Sitharaman and Securities and Exchange Board of India (Sebi) chief Ajay Tyagi.
In recent weeks, the market has been abuzz with speculation that the government is reviewing various capital market taxes such as the long-term capital gains tax (LTCG) and the dividend distribution tax (DTT).
“I request the finance minister and Sebi chairman to examine the overall transaction costs, including taxes, margins and compliance costs, to improve the competitiveness of Indian markets. This would also facilitate an increase in our weightage in the global indices, attracting more foreign capital. Deep and liquid secondary markets are important to facilitate primary capital raising and we need to improve the breadth and depth of our secondary markets,” said Limaye.
When asked if the government was indeed considering a reduction in taxes, Sitharaman refused to comment.
On the sidelines, Tyagi said any reduction in the capital market tax would be a welcome step, adding that he was not privy to any such discussions.