Industry experts believe this will give a boost to the capital markets as buying and selling of shares will not be subject to levy of any taxes.
In a recent circular, Central Board of Excise and Customs (CBEC) has excluded the term ‘securities’ from the definition of goods and services in the revised draft of GST Bill.
This comes as a relief for the MF industry which was lobbying to exclude securities from the definition of goods in draft GST Bill. We spoke to a few experts to understand how it can benefit the MF industry.
Jimmy Patel, CEO, Quantum MF is optimistic that this move will benefit capital markets. “Excluding the term securities from the goods definition means that buying and selling of shares will not attract any tax.”
G Pradeepkumar, CEO, Union AMC says, "This change was required otherwise the transaction cost would have gone up substantially.”
Earlier, Cafemutual had reported that AMFI has requested the government to exclude ‘securities’ from the definition of goods in the draft GST Bill. Until now, there is no service tax on securities as it doesn’t come under consumable goods. According to the earlier draft GST, every time a fund manager would have executed a trade, the fund would have to pay service tax just like STT. Simply put, it would have raised costs substantially and dampen the demand for mutual funds.
