Easwar panel on tax simplification constituted by Modi Govt has submitted its first report and have given a few suggestions like categorising income upto 5 lacs as capital gains (and not business income etc ) . They have an email id firstname.lastname@example.org where we can give our feedback after reading the report which is available in the income tax dept website www.incometaxindia.gov.in
I request anyone who is interested to read my email that i have sent to them and also write to them echoing this views if you agree to my logic .
Give below the text of my email to them sent today - Remember last date for giving suggestions is 23rd Jan (just 3 days more )
Today a foreign Portfolio investor who trades in indian stocks pays NIL short term capital gains tax whereas an indian trader in indian stocks pays 15% short term capital gains tax.The reason for this is that the Foreign portfolio investor has the capability to register his firm in a zero tax DTAA host country (like Dubai or mauritious or Singapore ) where the tax is Zero on such transactions.
The above leads to huge issues around Equity and Fairness - Why should a foreigner who makes money trading in indian stocks pay zero tax whereas a small indian trader has to pay 15% STCG tax just because we can not register a dummy firm in a foreign country ?
Further it is to be noted that the amount realized by indian govt from short term capital gains tax is miniscule (about 3500 crs ) . My suggestion therefore is that we must have Zero Tax on STCG on listed equity (similar to current scenario where long term capital gains on shares held over 1 year is at zero levels ).
1.Huge boost to investor sentiment and overall feel good factor
2.Will help govt’s disinvestment program
3.Will remove unfairness in treatment of FPIs vs indian traders
4. Amount foregone of 3500 crs can be made through STT on higher volumes
5.Alternatively STT can be raised subsequently if volumes do not go up
6.This was also mentioned in the Tarapore committee report.
7.No need to route FDI thro’ Mauritious - More transparancy.
Kindly therefore consider the solution of abolishing short term capital gains tax of 15% on listed indian equity . This will lead to Real simplification and Real easoe of doing business .