The Hindu Business Line : ANMI seeks rollback of security transaction tax proposals

Association of National Exchanges Members of India (ANMI) has once again pitched for rollback of changes proposed in the 2008-09 related to securities transaction tax (STT).

The national council of ANMI, which met here on Saturday, dwelt upon the implication of the proposal to treat STT as expenditure to assess a broker’s final tax liability, and not as a deductible. It is felt that this would mean a sharp rise in effective STT.

ANMI said in some cases the effective rate of STT for those who claim business income shall increase by 66.66 per cent on a post-tax basis, should rebate on STT under section 88E (of the Income-tax Act) be replaced by treating STT as business expenses. The new treatment is to become effective from April 1, 2008.

Talking to newspersons, Mr Nirmal Agarwal, the outgoing president of ANMI, said a direct fall-out of this new norm, would be a drop in the arbitrage and trading turnover in the market, which according to ANMI estimates accounted for, at the peak, 90 per cent of the total turnover on the bourses. “This would also reduce market liquidity and depth dramatically,” Mr V. Murmuria, new president of ANMI, said.

Level playing field

Officials pointed out that the market regulator has accepted ANMI’s representation on lack of level playing field for brokers and retail investors against institutional players in terms of margin payment or subscription to an IPO. Margin collection for institutions on T+1 basis would begin from April 21 and from June 16 upfront margin payment would commence. The next board meeting of SEBI is also expected to make way for higher institutional payment in an IPO.

ANMI also expected the revised guidelines for operationalising the concept of self-regulatory organization or SRO would be put in place shortly. “We believe that SEBI may opt for more than one SRO and may not favour a “super SRO” for the market intermediaries”, said Mr EMC Panniappan, the alternate president of ANMI.

The organisation has also decided to hold its second international convention for 2008 in Kolkata and institute a national stock research award. ANMI also elected its new president and alternate president at its national council meeting here today.

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