  Turnover tax of 0.15% suggested in the budget speech on July 8, 2004 It is well known fact the speculators and arbitrageurs provide liquidity and depth to the market. With the implementation of technology by way of online trading systems, the markets have gained volume tremendously over the years and transaction costs have come down. Today, the total brokerage per leg of transaction varies between 0.02 to 0.10% for intra-day trading for clients dealing with established broking houses. And for delivery based transactions the clients are usually charged up to 0.5%. The traders can negotiate with his broker for a lower brokerage promising higher turnover. Usually for good traders the brokerage for day trading and derivatives is at the lower end of 0.02 to 0.03%.
With the introduction of transaction tax (only for buy transactions) the expenses for the trader increases by 3.5 times to 4.75 times per leg on averaging out the tax between buy and sell transactions. No other proposal in the budget 2004-05 has such an impact on traders dealing in any other goods and commodities markets. Unlike other trades, dealing in capital markets carries the inherent equal risk of making losses just as profits.
As the FM had asked for alternate plans, I have a suggestion: Instead of the turnover tax, is it not better if the traders can pay another 8% of brokerage paid in addition to the 8% Service tax as turnover tax (or give it another convenient name). This way the effective increase in cost would just be 8% instead of 350% to 475% increase. This suggestion if implemented would be acceptable to both the traders and brokers but would not result in the budgeted Rupees 3500 – 5000 Cr. collection. 
