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Govt may review I-T diktat to brokers

Rakesh P Sharma

The government is reconsidering the income-tax authorities' directive to brokers asking them to report all stock market transactions over Rs 20,000.

The government is planning to raise the threshold limit to Rs 1 million and an announcement in this regard is expected soon.

The government's decision follows pressure from big-ticket brokers and foreign institutional investors who are not in favour of disclosing the names of their clients who are involved in small transactions to the I-T department. Besides, the Rs 20,000 limit has also dampened investors' sentiment and the market is not witnessing fresh inflows.

Brokers, who were upset with the development, recently met income tax authorities in Mumbai. A delegation from Association of NSE members, BSE Brokers Forum and members from the two depositories also met the tax authorities.

Last week, the I-T authority sent notices to brokers asking them to send in details of all transactions worth over Rs 20,000 taken place up to February 2002.

Further, the department has demanded stock brokers to submit details of the current financial year till February within three days of notice date (which varies), it said that the brokers will have to send in such details on monthly basis on a floppy from March onwards.

The notices created panic among brokers as well as investors who are feeling shaky in stock market transactions for fear of being hounded by the authorities.

Three years back, the department had issued such notices seeking details of transaction worth Rs 1 million. The year after that the threshold amount was reduced to Rs 500,000 which subsequently reduced further to Rs 200,000 last year. Now it has been drastically reduced to Rs 20,000 brining in relatively smaller transactions under the microscope.

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