Sebi wishlist for Budget 2017: Here

are the key points

Ahead of Union Budget 2017, the capital market regulator Securities and

Exchange Board of India (Sebi) has sent its list of recommendations to the

Finance Ministry. Sebi has asked the government to encourage stock trading and

investments in mutual funds by easing tax rules.

The regulator has also recommended lowering the securities transaction tax

(STT) for tax trading and a slew of other measures, a report published in

Economics Times said.

Lower STT for trading

After its introduction in 2004, STT was fully deductible against the income tax

payable. But, after four years, an amendment was made to allow STT as a

deductible business expenditure and the rebate under section 88E was also

withdrawn.

Now, Sebi has recommended lowering the STT for tax trading.

The government has been collecting around Rs 7,400 crore from securities

transaction tax (STT) for the last couple of years, a Business Today report said.

Increase limit for tax-saving equity mutual fund

For relief under Section 88E, Sebi has recommended an increase in the investment

limit for tax-saving equity mutual fund schemes from Rs 1.5 lakh to Rs 2 lakh.

“Sebi has written to the government that rebates under Section 88E for STT paid

should be restored,“ ET quoted a senior regulatory official as saying.

LTCG on debt mutual funds

The regulator has suggested reducing the holding period of debt mutual funds from

36 months to 12 months for consideration of long-term capital gains (LTCG).

According to Sebi, if debt funds are held for more than 12 months, there should be

no long-term capital gains tax against the current requirement of holding them for

36 months.

Speaking at an event last year, Prime Minister Narendra Modi had said, “To some

extent, the low contribution of taxes may also be because of the structure of our tax

laws. Low or zero tax rate is given to certain types of financial income." The

statement had created ripples in the financial market. However, Finance Minister

Arun Jaitley later clarified that zero tax on LTCG was not on the way out in the

2017 budget. However, speculations are still rife that there might be LTCG tax on

equities.

Harmonise rules for debt mutual fund, debt securities

The regulator has recommended the government to harmonise tax rules for

investments in debt mutual funds and debt securities.

ELSS and tweak tax laws

Sebi has recommended the government to re-incentivise equity-linked saving

schemes (ELSS).

The regulator has suggested the ministry to increase ELSS investment limit to Rs 2

lakh from Rs 1.5 lakh under section 80C. Moreover, SEBI has recommended

changes in tax laws for alternative investment funds like safe harbour rules.

Article By – Business Standard