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of <h1>Court clarifies STT rates on physical delivery futures contracts, ensuring uniformity.</h1> <h3>Association of National Exchanges Members of India Versus Securities and Exchange Board of India and Others</h3> Association of National Exchanges Members of India Versus Securities and Exchange Board of India and Others - TMI Issues:1. Challenge to circular levying Securities Transaction Tax (STT) on futures contracts settled by physical delivery.2. Concern regarding potential prejudice to association members due to future STT rate changes.3. Request for clarification from CBDT on STT rates for derivative transactions settled by physical delivery.4. Difficulty in recovering STT on past transactions.Analysis:1. The petitioner challenged a circular issued by the National Stock Exchange of India Limited, levying STT at 0.10% on futures contracts settled by physical delivery. The petitioner contended that any future increase in STT rates could prejudice association members unable to recover the additional STT from completed transactions.2. Due to the perceived anomaly, the court requested the Additional Solicitor General to seek clarification from the Central Board of Direct Taxes (CBDT) to address the potential prejudice faced by association members in case of future STT rate changes.3. The CBDT clarified that derivative contracts settled by physical delivery should be treated similarly to equity share transactions settled by actual delivery or transfer of shares. The CBDT confirmed that the STT rates applicable to delivery-based equity transactions would also apply to derivative transactions settled by physical delivery, ensuring uniformity in STT rates for both types of transactions.4. The court found the CBDT's clarification resolved the issue by providing clarity on the applicable STT rates for the transactions in question. While the petitioner raised concerns about recovering STT on past transactions, the court deemed it unnecessary to address this issue as the CBDT's communication effectively addressed the stakeholders' concerns and obligations regarding STT payments.5. Consequently, the petition was disposed of with the clarification provided by the CBDT, ensuring that all stakeholders, including the National Stock Exchange and the association members, were aware of the STT obligations for the relevant transactions. The court commended the Additional Solicitor General for promptly seeking assistance from the CBDT to resolve the matter efficiently.
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