The Hindu Business Line : NSE, BSE turnover drops 24% as day traders protest against STT

Volumes down
The Budget proposes treating STT as a deductible business expenditure which would effectively increase their tax burden.
Professional arbitrageurs contributed up to 40 to 45 per cent of the trading volume in the market and the FIIs’ share in it was close to 20 per cent.

Our Bureau

Mumbai, April 1 Turnover at the country’s premier stock exchanges dropped sharply in the back drop of ‘day-traders’ (professional investors buying and selling stocks for just the day) staying away from the market in protest against the new tax regime that was coming into force from April 1.

The NSE and BSE registered a 24 per cent drop in turnover.

The Budget proposes treating STT as a deductible business expenditure which would effectively increase their tax burden.

For instance, if such a trader had clocked Rs 100 in investment profits and had also paid Rs 10 in STT he could set off the STT against potential tax obligation of Rs 30 (assuming a tax rate of 30 per cent). But under the new tax regime the business profits are reckoned at Rs 90 (pre-tax profit of Rs 100 minus the STT of Rs 10) on which the 30 per cent tax rate apply thus effectively pushing up the tax burden by Rs 7.

The combined ‘cash’ segment turnover of NSE and BSE and Future and Options (F&O) trade at the NSE dropped by 23.69 per cent or Rs 16,024 crore as the turnover came down to Rs 51,605.22 crore as compared to Rs 67,629.36 crore on March 31.

Day traders seek to take advantage of intra-day price differential in stock prices and thereby also contribute to the liquidity in the market.

Professional arbitrageurs contributed up to 40 to 45 per cent of the trading volume in the market and the FIIs’ share in it was close to 20 per cent.

“We hope that the Government will realize that it has overlooked our problem and we are willing to sit with them to do something,” said Mr Rajesh Baheti, Chairman, Western India Regional Council of the Association of NSE Members of India’s (ANMI) to reporters here.

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