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I would like to know a little more about this "self-assessment" and the harassment of traders.

Interesting, it seems the tax on trading causing all the difficulties between traders and the government, that is this core of the article, is evasion a 0.01% tax on broker's turnover, a transaction tax on commodity, stock and futures trading.

http://www.thehindubusinessline.com/businessline/2001/07/12/stories/141262yx.htm

Brokers up in arms over turnover tax issue

Our Bureau

MUMBAI, July 11

THE issue of turnover tax on stock brokers continues to haunt the markets and this time, threatens the likely closure of markets. The stockbroking community is up in arms, thanks to dwindling trading volumes and falling brokerage rates over the last few months.

Brokers, under the banner of BSE Brokers' Forum and the Association of NSE Members of India (ANMI), will take out a peace procession to protest against the imposition of turnover tax on stock brokers.

Both the associations have been galvanising support from members over the last few days and expect over 500 brokers to assemble outside the office of the Securities and Exchange Board of India (SEBI) on Thursday at 4.00 p.m.

The petition focuses on two pertinent issues. The issue of the SEBI turnover-based fees and registration of brokers for the derivatives segment on the two bourses.

The Supreme Court had on February 1, 2001 upheld SEBI's legislative competence to levy a fee on the basis of brokers turnover.

It had also said that SEBI would be collecting the fee in accordance with the Bhatt Committee report. However, brokers had argued that the R.S. Bhatt committee recommendations were made keeping in mind the 1994 capital market scenario.

According to them, the recommendation could be interpreted in a variety of ways. And if it were to be applied `literally,' the liability of brokers, specially for those who have entered the capital market two years ago, would be very high.

``The bourses have now stipulated that those brokers, who have not cleared their dues to SEBI, will not be allowed to register for derivatives trading. The petition aims to resolve these issues and bring it to a close,'' a broker said.

What perhaps is more significant is that the peace march is being held on the very day that SEBI is due to make a presentation to the JPC officials.

The brokers' contention, according to sources in ANMI and the Brokers' Forum, is that all members should be allowed to trade in derivatives segment. Their argument is that since one derivative product, badla (carry forward) system, has been abolished, they should be allowed to trade in the new product (derivatives) which has been introduced in place of badla.

Another point of contention among protesting brokers is that turnover tax has been fixed at one per cent of one per cent (0.01 per cent) of turnover as recommended by the R.S. Bhatt committee then.

The Brokers' Forum chairman, Mr Mohan Vijan, said that the rate was prescribed when brokerage rates were one per cent. ``With current brokerage rates of 0.05 per cent with falling volumes, it is difficult for brokers to survive,'' Mr Vijan said.

The brokers' associations are suggesting that SEBI tax may be based on gross brokerage earned than using the turnover as base for calculation. ``Keeping the spirit of Bhatt committee, tax at the rate of one per cent of gross brokerage may be levied,'' Mr Vijan said.