Government on Wednesday exempted bonds from the new transaction tax and reduced the levy on day traders and arbitrageurs from 0.15 per cent to 0.015 per cent.
Announcing the changes in the transaction tax in his reply to the discussion on the Budget 2004-05 in the Lok Sabha, Finance Minister P Chidambaram said the 0.15 per cent fixed transaction tax on all securities has now been replaced by differential rates.
He said those securities which attract 0.15 per cent transaction tax will continue to be exempt from the long term capital gains tax and attract 10 per cent short term capital gains tax.
Giving the rationale behind the introduction of the transaction Tax, Chidambaram said it was neat, efficient and easy to administer and above all eliminated tax avoidance.
Referring to the demand that the new tax be dispensed with, he said people have to be brought into tax net and it was in this context it was not being withdrawn.
However, after consultations with SEBI and other stakeholders, it was decided that the Government would have differential rates and to exempt bonds where the profit margins were wafer thin.
For delivery based transactions, Chidambaram said 0.15 per cent tax remained but it would be shared equally by buyers as well as sellers.
{{/usCountry}}For delivery based transactions, Chidambaram said 0.15 per cent tax remained but it would be shared equally by buyers as well as sellers.
{{/usCountry}}Transactions in derivatives will now attract 0.10 per cent transaction instead of the original proposal of 0.15 per cent, he said.
Chidambaram renewed the UPA Government's thrust on agriculture and industry to generate employment and boost the economy.
Chidambaram stressed on the need to boost investments, saying that it is the key to peoples' welfare.
The Minister said that agriculture is the key to economic growth and the amount allocated for farm credit will be raised to Rs 1.05 trillion. More funds will be allocated for the food for work programme, he said, adding that delivery systems need to be tested and validated.
The Minister said that the mandate given to him requires him to revisit the priorities of the reform process. He said there is a a need to restructure the public sector undertakings and make the sector more accountable for the funds given to it.