Securities Transaction Tax (STT)

Securities Transaction Tax (STT)
  • Context: 

  • The Supreme Court of India has decided to examine a plea that challenges the constitutional validity of the Securities Transaction Tax (STT).  

  • Basics of STT: 

  • STT is a direct tax that is levied on securities transactions that are conducted through a listed stock exchange. 

  • It was introduced in 2004

  • The primary objective is combating tax evasion in the stock market.  

  • Grounds for the Challenge: 

  • The petition argues that the STT violates the fundamental rights to equality, the right to trade or earn a livelihood, and the right to live with dignity. 

  • The petitioner argues that they are subjected to double taxation because they pay capital gains tax on profits and then also have to pay STT on the same transaction. 

  • It is also highlighted that STT is unique because it is imposed on the act of carrying out a profession itself, irrespective of whether a profit is made or a loss is incurred.  

  • While TDS (Tax Deducted at Source) for salaried individuals is adjustable or refundable, there is no such provision for STT 

  • This means that the traders have to pay both STT and capital gains tax.