The capital and commodity markets of the country are all set to welcome Goods and Service Tax regime which is going to be come in effect from July 1. On an average, more than 50% of the brokers across trading platforms have already registered for GST.
688 brokers out of the 1,100 on the Bombay Stock Exchange have already registered for GST and the rest have either applied for registration or not active much in the market.
An official familiar to the development said, “BSE and registered brokers are ready for GST and there would not impact much on market but certainly on taxation.”
As of now, service tax on exchange services are 15% and now it will be increased to 18%. The National Stock Exchange will collect transaction charges till June 29 trade on the 15% and trades made on June 30 will be charged 18%.
On the NSE, more than 65% 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 maintain the product in warehouses because of multiple taxations and now one country one tax will encourage to the participant to hedge their position on the exchange.
Similarly, 70% out of the 700 strong Multi Commodity Exchange (MCX) have registered for GST.
GST is expected 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 fall under the tax net and hence it will not be easy to get away 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.