As part of their attempts to lower the trading costs in the Indian stock markets - which is among the highest globally - the Association of National Exchanges Members of India (ANMI) has again urged finance minister Nirmala Sitharaman to withdraw long term capital gains tax and also taxation of dividends in the hands of the investors.
Representatives of the broking body who met the finance minister last week, told the policy makers that while India is the only country to levy a tax on equity trading in the form of securities transaction tax (STT), dividends currently are taxed thrice in the form of corporate tax, dividend distribution tax and finally at the investor level.
The capital market participants highlighted the fact that while a tax is levied on all equity market transactions, India also taxes business income and the capital gains on securities, which, combined with the triple taxation on dividends, make the Indian capital market quite unattractive globally.
Incidentally, the broking body has requested the government to take “urgent steps to boost investor sentiment” especially given the overall weak sentiment among investor community, especially foreign portfolio investors (FPIs).
“Long term capital gain tax and taxation on dividends in the hands of Indian investors should be withdrawn,” stated ANMI in its memorandum to the government.
