With multiple taxes applicable on equity and equity-oriented investments, it is expected that the STT would be reduced to give some relief to the investors.
Currently, the investors investing in listed and unlisted equities, derivatives, options, ETF (Exchange Traded Funds) and equity-oriented mutual funds (MFs) need to pay Securities Transaction Tax (STT) on transactions of the securities.
The rate of STT varies from 0.001 per cent in case of ETF to 0.2 per cent in case of IPO (initial public offering).
With multiple taxes – income tax on dividend income, capital gain tax on gains, etc – applicable on equity and equity-oriented investments, it is expected that the STT would be reduced to give some relief to the investors.
Talking about what he expects from the Union Budget for the financial year 2022-23 to be presented on February 1, 2022, CA Karan Batra, Founder and CEO of CharteredClub.com said, “I am expecting that the STT rates would be reduced.”
While the STT is expected to be reduced, gains from investments in crypto currencies – which so far are not taxed – would be brought under the tax net.
As crypto currencies are not considered as an asset or a valid instrument in India, trading and investing in cryptoes are also not recognised as valid investments so far. In fact, the Reserve Bank of India (RBI) in April 2018 banned trading, investment and holding in India. In March 2020, however, the Supreme Court of India struck down the RBI order on crypto ban.
Facing the identity crisis, cryptoes so far evaded the tax net. However, with the estimated crypto asset holding in India crossing $600 million in 2021, the government is seriously thinking to bring the gains from crypto investments under the tax net.
“I am also expecting that all crypto investments to be disclosed in ITR (Income Tax Return) and also in the SFT (Statement of Financial Transactions). A lot of crypto investors are not paying taxes on the gains made from the crypto investments and this could be under the government lens,” said Batra.
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