Government to consider cuts in STT and stamp duty on securities transaction
27 Sep 2011
In a bid to perk up weak investor sentiment, which has been hit by the developments in the global markets, the government is considering reduction in securities transaction tax (STT) paid on selling and buying of shares, and bringing down the stamp duty paid on futures and options trading in equities.
According to sources the finance ministry was seriously looking at the proposal from exchanges to cut taxes paid on transactions in shares, currently levied in the range of 0.017 per cent to 0.125 per cent.
Markets have been suffering heavy capital flow out of the country on fears of a slowing economy, high inflation and uncertain global economic conditions.
The expectation is that the reduction in STT and rationalisation of stamp duty would attract greater market participation, higher volumes as also win back confidence of investors. The modalities of how the changes would be brought about remain to be worked out sources said.
The cut is expected to attract foreign institutional investors to the domestic market. Heavy capital outflows have been witnessed from Indian markets due to high inflation in the country and recessionary trends in European countries.
FII inflows registered a meager $4.3 billion in January as against $39.5 billion in 2010.
