The Bombay High Court on Thursday directed Additional Solicitor General (ASG) Anil Singh to seek clarity from CBDT by August 28 on securities transaction tax (STT) on physical delivery of equity derivatives.
The brokers’ association ANMI moved the court last month against SEBI and NSE for holding brokers responsible for collecting STT on physical delivery of equity derivatives. CBDT too has been made a party to the matter. Brokers say there is no provision in law to tax derivative trades that result in delivery.
Delivery-linked F&O
ANMI reasons that unless Parliament passes a law for STT levy on contracts in the equity futures and options (F&O) segment that result in delivery, there is no mandate for brokerages to collect it from their clients or for exchanges to levy it on brokers.
Brokers fear that if the exchange raised a tax claim in the future, they may not be able to collect it from their clients as nobody would come forward to pay dues that were not applicable to them when they traded.
“We are more like a toll naka and the government is asking us to collect a toll after cars have passed by,” argued senior counsel Birendra Saraf, who was appearing for ANMI.
The division bench of the Bombay High Court comprising Justice BR Gavai and Justice MS Karnik said the government should clarify its position in the matter within a week.