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Union Budget
Budget Wishlist - Mr. Parth Nyati, Co-Founder and COO of discount brokerage firm TradingBells
Posted On : 2017-01-26 23:48:31( TIMEZONE : IST )
Demonetisation and the necessary evils that succeeded it have made it important for the Government to release a populist budget to drive positivity towards Indian economy. Pending Elections too may make way for a populist budget. Any Indian common man might expect relaxed taxation norms from a populist budget. The Indian Capital Markets Industry is no different.
Securities Transaction Tax (STT) has been seen as a major factor in killing the depth of capital markets as it repels high frequency traders. The Indian Capital Markets Industry's expectations from the Government is to completely abolish the STT to promote equity culture in India. The loss in Government's revenue could be adjusted by increasing the time duration of long term capital gains tax exemption on shares and equity mutual funds from 1 year to 2 years. There are certain reports that this might be increased to 3 years which might trigger panic amongst institutional investment funds that operate with a goal to provide tax free returns leading to short term volatility.
Another argument in favour of abolishing STT is that very soon, India's International Exchanges will take-off. These will enjoy the benefits of highly relaxed taxation norms. These will operate directly in competition to the domestic exchanges. If the domestic taxation is not relaxed, a lot of money from Indian HNIs and Institutions will flow into the International Exchanges further reducing the depth of domestic exchanges.
Relaxing taxation coupled with digitising all the financial markets operations would promote equity culture. This is imperative for Indian economy at this juncture where the Government's vision is to make India a developed nation in a time span of one generation. Financial Market intermediaries would naturally flourish if this happens and would contribute to prosperity and job creation aligning with the Government's objective of creating 300 million jobs by 2022.
