Budget expectations: ANMI asks to rationalise tax exemption in LTCG, STCG; increase TDS threshold on dividend

Budget expectations:The Association of National Exchanges Members of India (ANMI), a body comprising trading members across the country, has put forth some wishes for Indian Finance Minister Nirmala Sitharaman to be fulfilled in the Union Budget 2024.  

One of the wishes includes rationalisation for tax exemption in Long Term Capital Gains (LTCG) and Short Term Capital Gains (STCG) U/S 111 A/112  etc. 

According to stock brokers' association ANMI, currently,  the STCG arising on equity shares (listed) that have suffered STT is charged to tax at 15 per cent plus surcharge, without any tax exemptions like in the case of LTCG. Additionally, there is no threshold limit for STCG and every rupee of STCG is charged at 15 per cent. Thus, they wish that STCG be also allowed a tax exemption up to Rs 3 lakh as against NIL at present.

Further, they want the Finance Minister to allow a tax exemption on Long-term capital gains of up to Rs 5 lakh as against  Rs 1 lakh at present. 

ANMI President Vinod Kumar Goyal had already submitted association's recommendations to the CBDT Chairperson. 

How will allowing tax exemption help?

As per ANMI, this will improve participation in the market and also encourage investments and any marginal revenue loss will be recouped by increased volume on which STT, etc can be earned. 

Another significant wish is to increase the threshold limit of TDS on dividend. At present, the TDS on the dividend is not required to be deducted if the dividend does not exceed Rs 5,000.  

However, this is limited to individual recipient shareholders only. For the sake of ease of doing business and reduction in paperwork (TDS certificate I 26A3 IAIS). This be applied to all resident shareholders irrespective of status. This threshold limit of Rs 5,000 was set long back. In the meantime, due to inflation, IT constantly revises upward various thresholds in different sections; this too should be enhanced to Rs.  50,000  per company per person.

How will an increase in the TDS threshold on dividends help? 

As per ANMI, this will save senior citizens and other assessees like government employees from filing claims for a refund of tax in case of non-taxable income, if taxable income does not exceed the basic limit.

Moreover, there will not be any revenue loss because those with taxable income will in any case be filing income tax returns including dividend income in their income and the tax payable will accordingly be adjusted from their advance tax, self-assessment tax, or other TDS.

Also read: Reintroduction of rebate for section 88E will result in a larger collection of STT/CTT, says ANMI 

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