SEBI is assessing the estimated gains in terms of the overall stock market turnover volumes as also for the savings that investors and traders might realise from the withdrawal of the securities transaction tax, which is being levied on stock market transactions since October 2004
New Delhi: Capital market regulator Securities and Exchange Board of India (SEBI) is reviewing the impact on the stock market turnover from a possible scrapping of securities transaction tax (STT), which is levied on all sale and purchase in the equity market, reports PTI.
The regulatory authority is in favour of a complete or phased withdrawal of the levy and it expects any such move to positively impact the market turnover, a senior official said.
SEBI is assessing the estimated gains in terms of the overall stock market turnover volumes as also for the savings that investors and traders might realise from the withdrawal of this tax, which is being levied on stock market transactions since October 2004, he added.
The regulator would submit the findings of its review to the finance ministry at the time of its submissions for the next year’s union Budget proposals.
The ministry’s capital markets division is said to be in favour of reviewing the STT framework with a view of either scrapping it altogether or in a phased manner, but a final call is likely to be taken by the revenue department as such a proposal would lead to loss of tax revenues for the government.
The government is estimated to have garnered about Rs7,500 crore through STT in the fiscal year 2010-11, while about Rs7,400 crore was collected during 2009-10.
Market players have been demanding withdrawal of STT ever since it was introduced in 2004 and they claim that removal of this levy would help the market grow further.
The rate of this levy has anyway come down considerably since its introduction at the rate of 0.15%.
Currently, the rates range from 0.025 % to 0.125% depending on different market segments such as cash dealings, intra-day trade and derivatives markets.
The tax was introduced during the Budget proposals for the year 2004-05 by the then finance minister P Chidamabram as part a strategy to rationalise the tax structure for the capital market.
However, the levy has faced opposition for all these years and SEBI, as also the stock exchanges and various market entities, have been demanding a review of the STT regime by the government.
Even a high-powered expert panel on potential of Mumbai as an international finance centre had suggested scrapping of the STT levy, saying it was a dampener for the international investors' interest in Indian markets.
The panel— which comprised eminent persons like former SEBI chairman CB Bhave, former SBI chairman OP Bhatt, KV Kamath, Ravi Narain, Nimesh Kampani and PJ Nayak—had also suggested withdrawal of stamp duty levied on the value of instruments used in various market transactions.
A previous draft of the proposed DTC (Direct Taxes Code) bill, which seeks to streamline all the direct taxes in the country, also suggested scrapping of the STT, but the proposal was removed from the bill that was finally introduced in Parliament.
The opponents of this levy argue that the markets should not be subjected to a turnover-based tax as it hampers the business, but the tax has been a good revenue-earning tool and has also helped the tax authorities keep a track for any black money flow into the stocks.
The tax authorities use the STT returns for populating the transacting party data into the ITS (Individual Transactions Statement) of the transacting party for verification with their income-tax returns, an official said.
He added that a possible STT withdrawal would require them to set up an alternative mechanism for an additional check on stock market transactions, besides the PAN-based and other tracking tools.
The July-September quarter saw 94 deals worth $1.91 billion, as against 58 deals worth $1.71 billion in the same period last year, according to Grant Thornton's ‘Dealtracker’ report
New Delhi: Private equity investment (PE) in India touched $1.91 billion in July-September this year, which was 18% higher than that in the same period last year, reports PTI.
For the third quarter of 2011, PE deal values amounted to $1.91 billion, as against $1.71 billion in the same period last year, according to Grant Thornton's ‘Dealtracker’ report.
In terms of number, the July-September quarter saw 94 deals compared to 58 deals in the same period last year.
“Private equity investments during Q3 2011 have shown a marginal growth in value and a high growth in volume over the same period for the previous year,” Grant Thornton India partner and practice leader, valuations, Srividya CG said.
The uptrend in PE investments is in sharp contrast to the sluggish stock markets.
In comparison to $1.91 billion of PE investments in the third quarter this year, the capital raised through the initial public offer route during the said period stood at just $455.92 million through 11 IPOs, Grant Thornton said.
Experts believe that owing to the subdued stock markets, several companies that were looking to raise funds from public are now opting for the PE route.
Meanwhile, as per a report by SMC Global Securities, the ongoing volatility in the market has as many as 22 companies, with valid SEBI approval, cancelling their IPOs this fiscal.
They include Reliance Infratel, Glenmark Generics, Gujarat State Petroleum Corporation, Raheja Universal, Sterlite Energy, Jindal Power and Avantha Power.
The report, however, cautioned that a subdued IPO market might set panic in the mind of PE funds, who generally invest in unlisted companies in the hope of exiting through IPOs, as they will not be able to exit from their investments.
One97 communications, one of the firms which has deferred its IPO has PE investors like Intel, SVB India and SAIF Partners, while Micromax, which has also postponed its IPO plans boasts of PE investors like TA Associates, Sequoia, Sandstone Partners, Madison India Capital.
Amending certain clauses related to equity listing, depository receipts and SME listing agreement, SEBI has directed firms to henceforth submit limited review report of auditors along with unaudited results
Mumbai: Market regulator Securities and Exchange Board of India (SEBI) has amended certain clauses related to equity listing, depository receipts and SME listing agreement, under which firms will henceforth have to submit limited review report of auditors along with unaudited results, reports PTI.
“It is being observed that certain listed entities while submitting their interim financial results, submit unaudited financials first and subsequently submit the limited review report after a lag.
“It is, hereby, clarified that submission of unaudited results shall be accompanied by the limited review report of the auditors,” it said in a circular.
Besides, with regard to disclosure of quarterly financial results, listed entities will now have to disclose figures in respect of immediately preceding quarter as well in addition to the existing requirements.
According to SEBI, this is intended to give a better comparative picture of the quarterly financial results.
“The changes are part of SEBI’s effort to improve existing provisions, streamline the system and prevent fraudulent action by brokers,” CNI Research chairman and managing director Kishore Oswal said.
Companies will have to submit the last quarter results along with the audited annual results.
The regulator has also amended clauses relating to the mode of supplying annual reports to shareholders.
“... in line with the green initiative of ministry of corporate affairs... it has been decided that instead of supplying complete and full annual reports to all the shareholders, listed entities shall supply soft copies of full annual reports to all those shareholders who have registered their email addresses for the purpose,” SEBI said.
Companies will also have to supply hard copy of abridged annual reports to others and hard copies of full annual reports to those shareholders who request for such a copy.
To bring further transparency to the disclosure of voting results by listed entities, SEBI has directed to “disclose their voting results in the prescribed format to the exchanges and also place the same on their websites, within 48 hours from the conclusion of the concerned shareholders’ meeting.”
To begin with, this requirement shall be applicable on the top 500 listed entities based on market capitalisation, computed as on today.