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Block of securities and STT

Budget - By: - CA DEV KUMAR KOTHARI - Dated:- 9-2-2016 - Budget suggestion: Security transaction tax (STT) as tool of tax collection and system of block of assets for simplification of taxation on income from dealing in securities. Synopsis: STT may be considered as advance tax. Rates may be increased by 1.5 times and double of rate may be applied to persons not having PAN. Incomes of different kind may be assessed as trading profit (assets held for less than 60 days), capital gains under block .....

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and exemption or low rate of tax has also caused suspicion in mind of tax authorities. Unfortunately tax authorities are using authority in abusing and blatant allegations on tax payers by use of words like you have evaded tax on income by way of capital gains, just based on hearsay and presumptions and bias. Many proceedings have been started for reassessment, revision etc. even in case of small tax assesses. STT is in lieu of tax on income, When STT is levied long-term capital gains are exemp .....

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tal gains on certain type of securities long-term capital gains are exempted. However, such exemption is taxed otherwise by disallowing expenses. In case of traders STT is allowed as an expenditure only in respect of transactions which resulted into business profit or gain and not in loss resulting transactions. So this computation is a very complex, if properly made. As a result many small traders do not claim STT. Simplification of STT vis a vis Income-tax with concept of block of assets: STT .....

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e. STT should also be considered as part of advance tax paid on behalf of assessee and allowable credit against income-tax installments of advance tax just like case of TDS. Rate of STT may be increased slightly say about 1.25 times from present rates. In case there is no PAN, a higher rate may be applied (say 2 times of rate applicable in case of PAN holders. Transactions in security be made taxable (by way of income-tax as follows: Intra-day gains, hedging gains, gains from security lending, e .....

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f securities and tax on gains: In block of short-term capital securities, the following formula be applied: Short-term securities / assets brought forwarded from previous year add cost of acquisitions, minus cost of securities becoming long-term, transferred to long-term block. From the remaining block of assets for short term securities/ assets, sale value of short term securities be deducted, if sale value is greater, the excess be taxed as short-term capital gains. If sale values is less, bal .....

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