Economy

STT collection in the first five-and-a-half months close to ₹11,000 crore

Shishir Sinha New Delhi | Updated on September 20, 2021

Representative image   -  istock.com/Nisha Dutta

Equalisation levy too see surge; Net Direct Tax collection records over 73% growth

Collection from Securities Transaction Tax (STT) and Equalisation Levy (EL) has crossed ₹10,000 crore and ₹1,300 crore, respectively, in just the first five-and-a-half months of the current fiscal. The rate of STT varies between 0.001 to 0.2 per cent while for EL the rate is between 6 and 2 per cent.

Meanwhile, as on September 18, the net direct tax collection for the current fiscal (2021-22) has surged 73 per cent in comparison with the corresponding period of the last fiscal (2020-21) and almost half of the budget estimate.

Collection numbers

According to officials, STT collection between April 1 and September 18 is close to the actual collection for the full fiscal of 2019-20 (₹12,374 crore) and the revised estimate for the full fiscal of 2020-21 (₹12,000 crore). Officials believe, if stock market continues to perform like the first half, then the collection of STT could go up as high as ₹21,000-22,000crore.

Buoyancy in STT collection could be attributed to the bull phase in the stock market. The BSE Sensex surged to 58,700 on September 20 from 47,869 on January 1, recording a gain of over 10,500 points in eight-and-a-half months. At the same time, the NSE Nifty jumped to 17,468 on August 13 from 14,018 on January 1, registering an increase of over 3,450 points.

Increasing trend of money rotation at a fast pace in the market has also boosted STT collection. In other words, many who are investing in an IPO are selling the shares on the day of listing and are reinvesting the money in another IPO. This has been giving a boost to STT collections.

STT is levied on transactions of taxable securities. These transactions include purchase or sale of an equity share in a company or a derivative or a unit of an equity mutual fund executed on a stock exchange.

The sale of the unlisted equity shares under an offer for sale to the public included in an IPO and where such shares are subsequently listed on a recognised stock exchange or sale of unlisted units of a business trust by any holder of such units which were acquired in consideration of a transfer under merger and amalgamation, attract STT.

Also, it will be levied on the sale or surrender or redemption of a unit of an equity-oriented fund to an insurance company, on maturity or partial withdrawal, with respect to unit-linked insurance policy (ULIP).

Equalisation levy

Collection through EL between April 1 and September 18 touched ₹1,325 crore, which is higher than full year collection of FY2019-20 (₹1,136.5 crore) and close to that of FY2021-22 ( around ₹1,600 crore).

Introduced in 2016, Equalisation Levy, also known as ‘Google Tax’, initially was applicable to payments for digital advertisement services received by non-resident companies without a permanent establishment (PE) here, if these exceeded ₹1 lakh a year. The rate of tax was 6 per cent.

The companies using these services are required to withhold the tax amount. In the 2020-21 Budget, the government widened the ambit of the levy by including e-commerce companies. The applicable tax rate is two per cent (plus a surcharge) on amount of consideration received/receivable by an e-commerce operator. This has come into effect from April 1.

Table

Net Direct Tax collection : Top 5 zones

(April 1-September 18 / In ₹ crore)

Securities Transaction Tax

Region

2020-21

2021-22

Change (%)

(In ₹ crore)

Mumbai

1,07,308.6

1,92,591.8

79.5

Year

Amount

Bengaluru

46,507.3

70,312.6

51.2

2018-19

11,527.50

Delhi

43,341.8

69,594.9

60.6

2019-20

12,374.23

Chennai

19,512.7

35,149.0

80.1

2020-21

16,926.99

Hyderabad

18,017.2

33,581.2

86.4

2021-22

(April 1-Sept 18)

10,967.4

Source: Income Tax Department, Lok Sabha Q&A

Published on September 20, 2021

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