- The implementation of GST in India will increase costs for investors in several ways. The service tax rate that investors pay has increased from 15% to 18% with GST, and investors do not receive setoff benefits to offset this tax. Investors will also still pay stamp duty and securities transaction tax. - Other investment-related charges like depository maintenance and transaction fees that were previously taxed at 15% will now be taxed at the higher 18% GST rate without additional benefits for investors. Delayed payment charges on broker loans will also be subject to an 18% GST tax on interest amounts. - While GST may boost India's GDP and company profits over the long run,

1. INVESTORS AND GST
Written By
Deena Mehta
Managing Director
Asit C Mehta Investment Interrmediates Ltd

2. Alot has been written on the impact of GST and
reasons why it should be implemented, postponed, or
modified. The inevitability is here. On the midnight of 30th
June India has been liberated from multiple taxes as many as
15+ taxes will be combined into a single tax called Goods and
services Tax or GST as it is popularly known. The brand
ambassador of GST ace badminton player P.V Sindhu says we
will break from the shackles of multiple taxes. However, little
does she know that for the Indian investors are one of the
worst affected classes in
the GST scheme of things.
Let me elaborate this.
The first damage is
increase in the rate or
tax. The service tax was
15% it has now been
increased to 18% GST.
Investors do not get any setoff; hence being the end user this is
a charge which will increase the cost of transaction. No setoff

3. benefits are available to retail investors since they are not
registered to pass on this service to any other entity.
The investor continues to pay Stamp duty and Securities
transaction tax (STT). Different states have different rates of
Stamp duty and there is huge discrimination amongst the
investors. The stamp duty must be abolished or if at all it
remains it should be standard across the country. As regards
STT it is beneficial only if you have long term capital gain.
There is no STT rebate available in income tax that you pay.
Hence STT is an item of increased cost. Lot of investors trade
in intraday and short term wherein STT is a big cost, in fact
more than brokerage and transaction tax.

4. There are other charges like Depository maintenance and
transaction charges which will also be subject to increase in
tax from 15% to 18%. This is again an increase without any
additional benefit.
Delayed payment charges, which were essentially an interest
on using brokers money or money funded by NBFC will now
be subject to GST. The cost of this charge will be an increase of
18% on the interest amount
Till now we just made available the client id to the exchange.
Of course, the system had the details of the customer. Now
With Aadhar being made mandatory for all financial

5. transactions the transparency in the system will go up
substantially. Good recording keeping of all your transactions
will be the need of the hour.
The biggest benefit cited by government is it will benefit
industry since multiple taxes will be eliminated. We expect
increase in GDP by at least 2-3%. This should improve the
bottom lines of companies listed on the stock markets. We
have seen a big bull run and we hope to continue to see it
going forward. The GST boost should improve your portfolio
values. We hope this increase cost of 3% will be fully absorbed
in the increase in share prices and we will not feel the pinch
of upward revision.