The country’s capital and commodity markets are ready for Goods and Service Tax regime which kicks in from July 1. On an average, over 50 percent of the brokers across trading platforms have already registered for GST.
Of the 1,100 brokers on the Bombay Stock Exchange, 688 have already registered for GST — and the rest have either applied for registration or not active much in the market. “BSE and registered brokers are ready for GST and there would not impact much on market but certainly on taxation,” a source close to the development told Moneycontrol.
Currently, service tax on exchange services are 15 percent and now it will be increased to 18 percent. The National Stock Exchange will collect transaction charges till June 29 trade on the 15 percent and trades made on June 30 will be charged 18 percent.
On the NSE, more than 65 percent of the total 1,200 brokers are GST compliant now.
The National Commodity and Derivative Exchange (NCDEX) has around 360 commodity brokers of which only 60 have registered. This new tax regime will impact much on NCDEX. In past, participants had slow down to keep the product in warehouses due to multiple taxations and now one country one tax will encourage to the participant to hedge their position on the exchange.
Similarly, on the 700- strong Multi Commodity Exchange (MCX), 70 percent have registered for GST.
Market participants expect GST to increase the participation on the exchange. Traders use “Dabba trading” for trades on MCX and NCDEX which fell after demonetisation. In GST, all participants come under the tax net and hence it will not be easy to escape the net.
Market regulator Securities and Exchange Board of India (SEBI) also discussed GST impact on markets in their last meeting. SEBI also feels GST will give a positive impact on the economy and participation will increase in coming years. SEBI feels numbers of IPO will also increase in coming due to GST.
Mainly compliance will increase for those brokers who have business in different states. They have to comply and register with SGST.