STT or Securities Transaction Tax is a tax payable by Investors & Traders to the Central Government and therefore is categorised as a Regulatory Charge.
Introduced in 2004-05, STT has helped simplify taxation on investing & trading in Capital markets in India & for investors, made it tax efficient as well.
STT is collected by the broker at the time of transaction is conducted by investor/trader. STT is applied on the value of transactions and charged to traders/investors in the contract notes issued to them by their Broker.
The government reintroduced Long Term Capital Gains (LTCG) tax in Union Budget 2018-19.
Long term capital gains exceeding Rs 1 lakh on sale of equity shares/units of Equity oriented Fund are proposed to be taxed at 10% without allowing any indexation benefit, but no decision was made on STT.
Now investor/trader will have to pay STT along with LTCG. This is a case of double taxation.
- Currently F&O trader is paying 30% tax and still they are paying STT.
- India only country in the world to have both STT & LTCG tax at the same time.
- Trader/ Jobber/ Arbitrager are hit very badly after the implementation of STT. There tax burden increased significantly after STT was introduced in 2004.
- Government had collected ₹ 9,000 crore from STT for the assessment year 2017-18.
- The total amount of exempted capital gains from listed shares and units is around ₹3.67 lakh crore as per returns filed for the assessment year 2017-18. This would translate into a tax collection to the tune of Rs 36,700 crore going ahead.
Government should abolish STT since they had reintroduced LTCG. Since the collection from LTCG will be way higher then STT collection.