Economy and Business  

Tax on stock transactions: FM
willing to give it a relook 

What is India News Service, July 10, 2004, 1700 hrs IST

The finance ministry is willing to revisit the transaction tax issue in its entirety. Finance Minister P Chidambaram has called a meeting of brokers' associations, the Bond Dealers' Association, primary dealers and foreign institutional investors on Monday and Tuesday in New Delhi to listen to their complaints and suggestions about the transaction tax he has proposed. 

Finance ministry sources said the main issue pertains to trading in government securities, where off-market trades under the Negotiated Dealing System are legal, unlike in the equities segment where off-market transactions are illegal. 

\93NDS accounts for almost 35 per cent of the bond market trading,\94 said the source, adding that these trades were spared from the 0.15 per cent transaction tax. 

Stocks recover: Stock prices recovered as sentiment improved today after the Securities and Exchange Board of India (SEBI) reassured investors that the transaction tax proposed by the finance minister would be applicable only after the Finance Bill was passed. 

Government irked over protests: Phone lines between the finance ministry and Sebi were busy on Friday as an anxious North Block watched trading deals refusing to take off in the debt market. 

IT teeth to catch erring trusts: Come October 1, and income-tax authorities may get the powers to wield the stick on erring charitable trusts and institutions. The Finance Bill 2004 introduced in the Lok Sabha on Thursday seeks to specifically empower a Commissioner of Income-Tax to rein in trusts breaking the law.

Debt market stranded: Debt markets came to a virtual halt Friday as traders decided to stay away in protest against the proposed transaction tax. However, stray deals were finalised on the NSE.
 
Hinduja-led groups bag Iran projects: Two consortia led by the Hinduja Group have bagged two major projects in Iran worth $600 million. One of the projects, to develop and construct a port at Chabahar, will cost $100 million. The members of the consortium include Ashok Leyland.

Overall:

Ministry will reconsider transaction tax: Finance minister Chidambaram's proposal ran into opposition from the stock market.

IT department may get more teeth: It could soon be tackling trusts not keeping their books clean.

Debt market was stranded: Very few deals were closed, thanks to the angry mood among brokers.

Hinduja-led groups bagged Iran projects: They will build a port at Chabahar for Rs 100 million.