Giving the rationale behind the introduction of the transaction tax, Chidambaram said it was neat, efficient and easy to administer and above all eliminated tax avoidance.

Referring to the demand that the new tax be dispensed with, he said people have to be brought into tax net and in this context it was not being withdrawn. However, after consultations with market watchdog Securities and Exchange Board of India and other stakeholders, it was decided that the government would have differential rates and exempt bonds where the profit margins were wafer thin.

For delivery based transactions, Chidambaram said 0.15 per cent tax remained but it would be shared equally by buyers as well as sellers. Transactions in derivatives will now attract 0.10 per cent tax instead of the original proposal of 0.15 per cent, he said.