Revenue department against abolition of STT

“STT helps in overall regulation and keep a check on cost involved. I don’t see any benefit of foregoing Rs5,000-Rs7,000 crore revenue ... It may boost sentiments in stock market temporarily. But I don't see any benefit,” said a senior revenue department official 

New Delhi: The revenue department is opposed to abolition of the Securities Transaction Tax (STT) as the levy helps keep a tab on investments in markets and track flow of unaccounted funds, reports PTI.

“STT helps in overall regulation and keep a check on cost involved. I don’t see any benefit of foregoing Rs5,000-Rs7,000 crore revenue ... It may boost sentiments in stock market temporarily. But I don't see any benefit,” said a senior revenue department official.

The stock exchanges have been asking the finance ministry to abolish STT arguing that such a step would help in boosting investments in stock markets and promote equity culture in the country.

STT, which was introduced in 2004, is levied on sale and purchase of equity. It ranges from 0.0125% to 0.025% on sale and purchase of equity. The government collects about Rs7,500 crore per annum from STT.

According to estimates, STT accounts for 51% of the transaction cost in stock markets.

The market players have raised the issue of abolition of STT during a meeting with the officials of the capital market division of the finance minister earlier in the month.

During the meeting representatives of stock exchanges, brokers associations and Securities and Exchange Board of India (SEBI) had pointed out that the levy was hampering the growth of markets without yielding significant revenue to the exchequer.

The government plans to collect over Rs7 lakh crore as direct and indirect taxes for this financial year, while the yield from STT was likely to be about Rs5,000-Rs7,000 crore.

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FIIs turn bullish; invest Rs1,000 crore in October

During 3rd to 28th October, overseas investors have purchased stocks and debt securities worth a gross amount of Rs58,483.40 crore and sold securities valued Rs57,470 crore. This translated into a net inflow of Rs1,014.30 crore, according to the data available with SEBI

Mumbai: After pulling out in the last two months, foreign funds have turned bullish and infused over Rs1,000 crore in the Indian markets in October, reports PTI.

During 3rd to 28th October, overseas investors have purchased stocks and debt securities worth a gross amount of Rs58,483.40 crore and sold securities valued Rs57,470 crore.

This translated into a net inflow of Rs1,014.30 crore, according to the data available with the Securities and Exchange Board of India (SEBI).

“In October, the Indian market has seen an upward movement, so foreign institutional investors (FIIs) invested in the market. In the last two months, overseas investors were pouring money in gold,” Geojit BNP Paribas research head Alex Mathew said.

He added, “Over the coming months, FIIs will continue to infuse capital in the BRIC countries.”

Meanwhile, the 30-share Sensex rose by 1,351.04 points, or 8% in October. In the last trading session, the BSE finished at 17,804.80, up 515.97 points from its previous close—the biggest one-day gain since 29th August, when it had soared by 567.50 points.

In August and September, FIIs witnessed an outflow. In August, foreign funds pulled out nearly Rs8,000 crore, or $1.8 billion, from the Indian stock and debt markets—the highest monthly withdrawal since October, 2008. Last month, they withdrew Rs1,866 crore.

Market analysts believe heavy selling by FIIs was triggered by the ongoing debt crisis in the Eurozone and a weakness in the US economy.

In October, FIIs were bullish on the debt market and poured in Rs1,697.30 crore, while they pulled out Rs683 crore from the equity market in the same period.

So far this year, FIIs have pumped in Rs18,679 crore into stock and bond markets, compared to about Rs1,79,674 crore in the whole of 2010.

The number of FIIs registered with SEBI stood at 1,749 as of October this year, while the number of sub-FIIs was 6,058 during the month.

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SEBI seeks overhaul of its own role, structure

The capital market watchdog is of the view that a turmoil in the global financial markets in recent years and emergence of a number of new market segments have brought to fore newer challenges and the need for a stronger regulatory mechanism

New Delhi: With an aim to strengthen its market oversight and policymaking capabilities in the wake of fast-changing market dynamics, the Securities and Exchange Board of India (SEBI) has begun the process of an overhaul of its own functions and organisational structure, reports PTI.

The capital market watchdog is of the view that a turmoil in the global financial markets in recent years and emergence of a number of new market segments have brought to fore newer challenges and the need for a stronger regulatory mechanism.

The proposed move comes after a leadership change in SEBI in February, followed by changes in various board-level and executive director positions, and restructuring of a number of its advisory committees in the recent past.

A proposal has been already discussed by the SEBI board to revisit various structural and organizational issues, re-prioritize areas of its focus and look at its technological and manpower needs.

To start with, the regulator has decided to strengthen its research and economic policy teams with the appointment of a chief economist. This would be followed by SEBI engaging an external consultant to recommend changes in its roles, functions, vision and organisational structure.

Subsequently, SEBI aims to set up an international advisory board to guide it while framing policies to meet the challenges emerging from various global market developments.

After the external advisor makes recommendations on changes in SEBI’s organisational structure, human resources, technology and its regulatory and oversight roles, those would be taken up with the central government agencies for further implementation, an official said.

The areas where SEBI is looking up for major changes include use of latest available technologies, incentives to attract and retain talent and acquiring expertise for dealing with complexities associated with various market segments.

SEBI last went through an organisational restructuring in 2003 and the market has gone through a sea change since then.

The proposed international advisory board could meet twice a year to assess the trends in global markets and to guide the activities towards meeting the emerging challenges.

Besides, SEBI also plans to organise brain storming sessions with international and domestic experts, including its own past chairmen.

Of late, global developments have become key to movements in domestic market and SEBI feels that it has become important to keep a track of global developments and trends.

SEBI has told its board that the events related to the recent global financial crisis have highlighted the need for continuous assessment of various developments and an immediate regulatory response.

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