Market boom has taxman smiling, too
With stock markets scaling new peaks, service tax collections from stockbrokers have hit an all-time high, report Manish Pachouly & Vyas Mohan.business Updated: Dec 07, 2007 00:54 IST
It’s not just investors who are laughing all the way to the bank. The stock market boom has put a huge smile on the face of the taxman, too.
With stock markets scaling new peaks, service tax collections from stockbrokers have hit an all-time high — they paid Rs 740.97 crore in financial year 2006-07, a rise of 67 per cent over the previous fiscal.
Figures available with HT show stockbrokers are at sixth position among 97 service sectors in Mumbai. Banking, telephony and insurance top the list.
“Brokers’ contributions have risen significantly despite there not being a major rise in the number of brokers registered,” said a service tax officer. In 2005-06, there were 2,528 brokers registered in Mumbai; in 2006-07, that number rose by a mere 207.
There’s been a steep rise in the securities transaction tax kitty, too. Compared with Rs 5,600 crore in 2006-07 across India, the I-T department collected Rs 4,800 crore in the first six months alone of the current fiscal. “By the time this year ends, we expect securities transaction tax collections to reach Rs 10,000 crore,” said a senior income-tax officer.
“Brokers’ incomes have shot up due to the rising number of investors in stock markets,” said broker Madhukar Sheth.
“As trading volumes surge, so will taxes. While the securities transaction tax is charged as a percentage of volumes, service tax is charged at 12.36 per cent on brokerage. Then, income-tax of 33 per cent is levied,” added C.J. George, chairman and MD, Geojit Financial Services.