Mumbai, Feb. 28: The booming capital market has attracted triple whammy from the finance minister.

With the prices of securities on a constant upward move, Chidambaram feels that the country’s tax kitty should also take a part of it.

As Chidambaram mentioned, the rates for the STT were fixed when prices of securities were much lower. Reflecting the increase in implicit capital gains in securities transactions, the STT rates have been raised by 25 per cent across the board.

Thus, a cash delivery transaction of Rs 1 crore, which attracted an STT of Rs 10,000, would now be taxed at Rs 12,500.

Market experts say that the market was expecting the rise in the STT by about 50 per cent and had already factored in the same. Thus, an increase of 25 per cent should definitely not affect the market sentiments.

Secondly, capital market services like bankers to an issue has been brought under the service tax net, whereby they will be slapped with an increased service tax of 12 per cent. “Widening of the service tax net was expected and many more such services will slowly come in the service tax ambit,” said Jai Prakash Sinha, vice-president and head of research, Kotak Securities. He said while the services sector contributes 55 per cent to the GDP, service tax contributes only a fraction.

Finally, the finance minister included long-term capital gains in the calculation of book profits for companies which pay minimum alternate tax (MAT) on the same.

Companies that have book profits but do not have taxable income on account of large deductions and concessions had to pay MAT at 7.5 per cent on the book profit, which has now been increased to 10 per cent.

“There are not too many companies who pay MAT but there were many among them who were not required to pay any taxes on their investments in securities. They will have to do so now,” added Sinha.