 "Stock Market, BSE, Nifty, Capital")
Stock Market, BSE, Nifty, Capital(Photo: Shutterstock)
Additionally, the securities transaction tax (STT) on Futures & Options (F&O) trading has increased, and the Securities and Exchange Board of India (SEBI) has streamlined the process for trading bonus shares.
Uniform transaction fee
India’s largest non-agri commodity exchange, the Multi Commodity Exchange of India’s (MCX) revised transaction fees for futures and options contracts, will also be effective from today. The new fee structure will set the transaction fee at Rs 2.10 per lakh of turnover value for futures contracts, while options contracts will incur a fee of Rs 41.80 per lakh of premium turnover value. The adjustment aims to streamline trading costs for participants in the commodities market.
Share Buyback Taxation
Starting October 1, income from share buybacks will be taxed as dividends, shifting the tax burden from companies to shareholders. This change means shareholders will be taxed according to their personal income tax brackets, which could result in a higher tax burden compared to previous practices. Previously, share buybacks were considered a tax-efficient method for companies to return capital to investors, but this new rule will affect the attractiveness of such strategies.
STT on Derivatives Trading
In a move aimed at curbing excessive retail participation in derivatives trading, the STT on Futures trading will rise from 0.0125 per cent to 0.02 per cent, while the STT on options trading will increase to 0.1 per cent. This hike, announced by Finance Minister Nirmala Sitharaman earlier this year, is intended to temper the rapid growth in derivatives trading among retail investors.
New T+2 Bonus Share Trading Framework
SEBI has also revised the timeline for bonus share trading, introducing a T+2 framework. Under this new system, shares issued through bonus schemes will be eligible for trading just two days after the record date. This change is expected to enhance liquidity and make it easier for investors to access their bonus shares more quickly.
In summary, these adjustments in transaction charges, share buyback taxation, STT on derivatives, and the bonus share trading framework mark a significant evolution in the Indian financial markets, prompting investors to reassess their strategies in light of these new regulations.
First Published: Oct 01 2024 | 9:32 AM IST
