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The Centre has made it clear that it does not propose to lower the securities transaction tax (STT). This was conveyed to the Rajya Sabha by the Minister of State for Finance, Mr S.S. Palanimanickam, in a written reply on Tuesday.
STT is a tax on transactions put through equity exchanges and was brought into force from October 1, 2004. The rate varies from 0.025 per cent to 0.25 per cent, depending on the type of security traded and transaction undertaken – whether sale or purchase.
Recently, the capital market division in the Finance Ministry had seriously considered cutting or removing STT after receiving suggestions from various stock exchanges. It had also called a meeting on October 17 to take a decision on the issue.
Some of the stock exchanges had asked the Finance Ministry to do away with STT, stating that such a move would help boost investments in the stock market.
The cumulative STT collections in April-October 2011 stood at Rs 2,958.09 crore, reflecting a 17.89 per cent decline over Rs 3,602.43 crore collected in the same period last year, official data showed. The STT collection is a function of the price of the security as well as the volume of its trade, the written reply pointed out.
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