The head of NSE asks Nirmala Sitharaman to reduce taxes to boost investment flows
MUMBAI: Vikram Limaye, head of the Indian stock exchange, NSE, said Tuesday that a multitude of taxes are making national markets not competitive, and called on the government to reduce the same to help investment flows .
He said that the tax on securities transactions, capital gains tax, stamp duty and goods and services tax on capital market transactions are hurting India compared to similar markets.
He made the comments amid a growing slowdown in economic growth which has collapsed to a minimum of six years and a series of measures taken by the government to revive it. In recent days, there have been conflicting media reports about whether the government is abolishing the dividend distribution tax, the securities transaction tax and the long-term capital gains tax on the shares.
A simplified fiscal structure would significantly improve the attractiveness of our markets and broader participation would improve liquidity between securities, Limaye said at an event to commemorate the 25 years of the NSE, in the presence of the finance minister. Nirmala Sitharaman .
He said that India is full of small aspirational companies that will require growth capital and the presence of a large group of investors is a necessary precondition for satisfying their aspirations.
I request the Minister of Finance and President Sebi to examine the overall transaction costs, including taxes, margins and compliance costs to improve the competitiveness of Indian markets. This would also facilitate an increase in our weight in global indices that would attract more foreign capital. Limaye said.
He said it is important to improve institutional participation in the markets by giving them uninterrupted access to a variety of products to obtain greater profits or manage risks more efficiently.
A thorough review of the institutional participation in stocks, derivatives of stocks and corporate bond markets should be carried out to better align the regulation and risk parameters to facilitate greater participation of pension funds, insurance companies, banks and mutual funds in the markets, said Limaye.
He also proposed a plan similar to Pradhan Mantri Jan Dhan Yojana (PMJDY) to open demat accounts to negotiate shares, where investors can open accounts simply by using a bank account and Aadhar's number.