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Just a month after the Bombay Stock Exchange kicks off its operations in Gujarat's
city on January 9 next year, the National Stock Exchange will follow with a launch in the
first week of February, a source close to the development told ET. The Bombay Stock
Exchange is even planning to trade for 22 hours a day to overcome competition from
different time zones, an official from the exchange said. Government in 2015 budget had
announced waiver of tax on transaction in equity, commodity and currency in addition to
zero tax on dividend distribution and capital gains. Also, the minimum alternate tax for
companies re-locating there was halved to 9% from 18%.
Transaction tax and stamp duty, along with other levies, form nearly 50% of
statutory costs for equity and commodity market participants. The Maharashtra
government alone earns between Rs 50 and Rs 100 crore annually as stamp duty on equity
and commodity transaction. Besides, the central government collects over Rs.6000-
Rs.8000 crore annually as transaction tax on the same.
The exchanges plan to launch derivative contracts of India's popular equity indices
too in GIFT. Bombay Stock Exchange's new index Sensex 50 would be a first mover, the
exchange official said. "Currency and commodity segments could be crowd pullers in
GIFT," said President, Association of NSE Members of India. "Zero tax is chief attraction for
propriety traders."
"Expectations from GIFT city are high," said President, Bombay Stock Exchange
Brokers Forum. "New products linked to highly traded international stock futures too
could enthuse brokers." Exchange officials say 95 trading members so far had sought to
register their company in GIFT city, which will operate like a tax free island and conduct
dollar traders.
Brokers are setting up their back office operations in the domestic center of GIFT
city, which is not tax free. The Companies can fund a subsidiary in GIFT to the extent of
400 % of their net worth through the overseas direct investment route.