Sleeping partner cannot answer: FM on brokers’ tax; urges collaboration for investor’s confidence

Finance Minister Nirmala Sitharaman faced pointed questi

ons regarding high taxes on stockbrokers and real estate transactions during a visit to the Bombay Stock Exchange.

A broker, emphasising the substantial financial contributions made through various taxes including GST, IGST, Stamp Duty, Securities Transaction Tax (STT), and Long-Term Capital Gains (LTCG) Tax, argued that the government acts as a "sleeping partner" in the business.

"Today the Government of India is earning more than the broker," the broker stated.

"So I am investing everything, I am taking a whole lot of risk and the government of India is taking away the entire profit of mine. You are my sleeping partner, I am a working partner with my finances, my risk, my staff, everything."

This statement highlighted the broker's concerns about the disproportionate tax burden placed on those actively involved in the market compared to the government's role. The broker further questioned the heavy taxes associated with real estate purchases, including Stamp Duties and GST, and sought clarification on plans to assist individuals with limited resources who wish to buy homes. Additionally, concerns were raised about the feasibility of operating under such a high tax structure.

Finance Minister answered with a smile and said, "A sleeping partner cannot answer sitting here."

This response, though lighthearted, did not directly address the concerns regarding the tax burden.

The event also saw Sitharaman urging the BSE to collaborate more closely with the Securities & Exchange Board of India (SEBI) to bolster investor confidence. She emphasised the importance of stringent compliance and robust regulatory standards for achieving this goal.

Furthermore, the Finance Minister issued a cautionary message to retail investors,warning them about the inherent risks associated with the derivatives market. She expressed concern that an unchecked expansion of the riskier futures & options (F&O) segment could have negative consequences for household finances.