STT likely to be brought down

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MP Guru
STT likely to be brought down
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Finance Minister P Chidambaram might come out with a bonanza for the debt market. Sources indicate that Budget 2006 is likely to remove the income distribution tax on debt mutual funds.

Currently, individual investors in debt MFs pay 12.5 per cent income distribution tax, while corporates pay 20 per cent. There's no such levy on equity mutual funds.

''This should be a good move. There is no sense to have a dividend distribution tax on debt funds," said Subhash Lakhotia, a tax consultant.

Day traders on Dalal Street might also get some good news in the Budget.

Retail investors

The Securities Transaction Tax (STT), which was hiked last year, is likely to be brought down to the 2005-06 levels. However, retail investors aren't likely to get any more sops.

With the revenue mop up under the STT extremely bullish, there is a probably of a roll back in the 25 per cent hike affected in these rates.

In the last budget, the indication so far is that the ministry might consider this as a serious proposition.

However, the revenue implication for the government also needs to be kept in mind. STT is proving to be bit of a cash cow for the exchequer.
 
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