Securities Lending & Borrowing Scheme
CIRCULAR NO. 2/2008, DATED
Securities and Exchange Board of India (SEBI) vide Circular No. MRD/DoP/SE/DEP/Cir. 14/2007, dated
In this context, the following taxation issues have arisen in respect of transactions under the scheme of Securities Lending.
(i) Whether the lending/borrowing of securities under the Securities Lending Scheme will amount to transfer under clause (47) of section 2 of the Income-tax Act (Act) in the hands of the lender?
(ii) Whether lending/borrowings of the securities will be subjected to Securities Transaction Tax (STT)?
The Lending and Borrowing of Securities under the new scheme notified by SEBI vide Circular No. MRD/DoP/SE/DEP/Cir. 14/2007, dated
Securities Transaction Tax (STT) is levied on purchase or sale of an equity share, unit and derivative, under such circumstances as specified in section 98 of the Finance (No. 2) Act, 2004. The transactions in the nature of lending and borrowing under the new Scheme do not fall within the scope of section 98 to the Finance (No. 2) Act, 2004. Therefore, the transactions of lending and borrowing are not liable to Securities Transaction Tax (STT).
Garima
Published in Income Tax