• Recently the Association of National Exchanges Members of India (ANMI) has again urged finance minister Nirmala Sitharaman to withdraw long term capital gains tax and also taxation of dividends in the hands of the investors.
• India is the only country to levy a tax on equity trading in the form of securities transaction tax (STT), dividends currently are taxed thrice in the form of corporate tax, dividend distribution tax and finally at the investor level.
• The capital market participants highlighted the fact that while a tax is levied on all equity market transactions, India also taxes business income and the capital gains on securities, which, combined with the triple taxation on dividends, make the Indian capital market quite unattractive globally.

Dividend Distribution tax

• A dividend is a return given by a company to its shareholders out of the profits earned by the company in a particular year. Dividend constitutes income in the hands of the shareholders which ideally should be subject to income tax. However, the income tax laws in India provide for an exemption of the dividend income received from Indian companies by the investors by levying a tax called the Dividend Distribution Tax (DDT) on the company paying the dividend

• Presently, the dividend distribution tax that is payable on the dividends offered to a company’s shareholders is 15% of the gross amount distributed as dividend

Securities Transaction Tax (STT)

• STT is a tax levied at the time of purchase and sale of securities listed on stock exchanges in India.

• Securities are tradable investment instruments such as shares, bonds, debentures, equity-oriented mutual funds (MFs) and so on and are issued either by companies or by the Indian government

• The rate of STT differs based on the type of security traded and whether the transaction is a purchase or a sale

Corporate Tax:

• It is levied on a firm's profit by the government.

• It is taxed on operating earnings after expenses have been deducted. The rate of corporate tax in India varies from one type of company to another i.e. domestic corporations and foreign corporations pay tax at different rates (25-50%)