The rebound in stock markets on the back of increased foreign institutional investor participation has led to a 20% jump in income-tax collection from brokers till date this fiscal, raising hopes of overall higher tax collections.
Brokers paid Rs 580 crore in income tax since April 1, according to the latest figure available with the I-T department. This is in addition to the securities transaction tax (STT) of Rs 3,207 crore collected during the period, which is also marginally higher than past years figure.
STT is a tax levied on every stock transaction executed through stock exchanges, irrespective of profit or losses flowing out of them. Corporate income tax is levied on the income generated by the taxpayer.
The jump in tax collection reflects the market rebound as well as increased trading volumes. BSE Sensex, the bellwether 30-share stock index of the Bombay Stock Exchange, which was hovering around 13,000 in September 2008, is now close to 17,000.
Motilal Oswal, chairman of Motilal Oswal Securities, said the jump in tax payment by brokers was in line due to a 50% rise in trade volumes. Amid fears of an adverse impact of drought and sluggish exports, the higher tax collection from stock brokers brightens the prospect of a higher tax collection this year, a senior I-T official said.
Other positive signals include higher growth estimation of the economy and a revival in domestic consumption. Corporate advance tax collections, too, grew 14.7% in the July-September quarter.
An official of Antique Stock Broking said the development indicates that the total tax payment will be higher this year. Tax collections from brokers in the past year dipped significantly in the wake of the global market crash.
The list of brokerages that have paid higher taxes this year include Citi Global Markets India, JPMorgan, HSBC Securities, Kotak Securities Edelweiss Securities and Antique Stock Broking.
Citi Globals payment went up to Rs 65 crore from Rs 50 crore, while Kotak Securities paid six times of its previous payment of Rs 6 crore. Edelweiss paid Rs 10 crore this time against Rs 1.26 in the previous April-September period.