PM wants Financial Markets to pay more tax: An Analysis.

 PM has given a statement regarding taxation on financial markets where stocks, shares, commodities are being traded now digitally. PM just gives statements and after that lakhs of crores of people start applying their mind and discussing with the related experts about the possible outcome of such statements. Now people think whenever PM gives any statement after sometime the related party agencies start implementing the same. 

So now people related with stocks and commodity exchanges, brokers, sub-brokers and traders along with short term & long term investors are all busy thinking & discussing the possible changes in related provisions. PM wants a fair share & tax burden should be taken by people relating to financial markets. 

This is fine but financial markets are all operating in digital mode including all trading operations, payments, receipts. So things here are transparent except Grey Market commonly known as Dabba Trade and everyone wants this Dabba Trade to be curbed. 

From whom PM wants more tax, the traders who are already paying CTT & STT (Securities Transaction Tax). The annual collection from STT is estimated to be 7000 crores. This is a handsome amount so whether STT would be further increased.

If we talk about investors, if they are blocking/investing their money in listed securities for more than 1 year then they are exempt from paying tax. Previously FIIs and NRIs used to pay tax at lower rates than domestic investors. Later the government made the taxation structure for domestic investors at a similar level with foreign investors. Whether again taxation for only domestic investors would be increased or for both domestic & foreign investors.

Presently the dividends from listed share companies are tax free. Whether dividend would be made taxable from financial markets. 

Few things are there like Tax Minimisation Strategy by Bonus Issue. 

People who know the law and sometimes play with it by buying penny shares of small cap shares at very low prices and they sell these shares at a very high price after holding these shares for more than 1 year. This way they accumulate heavy Capital Gain Deposit without paying any tax. So action is really needed against such people.

No one knows what is going there in the mind of law makers and what FM is going to present in the budget but one thing should be taken care that law should only punish the guilty and not the investors & traders who are fairly and transparently doing their business in financial markets.

problems for dishonest would increase :- Four Dimensional analysis of the PM's statement

Today PM Narendra Modi said that after 50 days of currency ban ie after 30 december 2016, problems for dishonest would increase:-

What does this mean .......  Four Dimensional analysis of the PM's statement

Political Analysis:- PM wants to take political advantage in coming elections in states of Utter Pradesh, Punjab, . By such statements PM wishes to pitch that he is deadly against corrupt people and is working continuously for the cause of bringing black money out.

Personal Image :- PM wants to show that he is a strict implementer of his thoughts. It is not like that he has just done currency ban. He is still planning the  working on this front without any wait. as soon as one thing is over he would keep the topic hot by starting some new such big step.

Now the point arises, what may be next such step as PM says that after 30th december, dishonest would have to face more problems:-
a) PM may start the concept of online property bank, wherein every property is to be registered and is to be linked with adhar and pan. Due to this people having multiple properties with high value and not in tune with income declared will be in problem and benami properties will also come in lime light.
b) PM may instruct authorities to strictly and thoroughly check cash deposited in banks between 8 november 2016 an 30 december 2016 with books of accounts and cash balance in books.
c) Prosecution provisions as per law may be fast implemented against those who try to escape income from assessment.
d) Heavy transaction tax on cash withdrawing from bank may be implemented.
Or it may be to frighten people from non disclosure of income.