The central government made it clear that it has no plans to reduce the Securities Transaction Tax (STT) charged on equity trades, as collections dipped by around 18% in the first seven months of the 2011-12. In a question whether government proposes to lower STT in country, the Minister of State for Finance S S Palanimanickam said, ‘No Sir’.
Earlier, finance ministry has indicated that government may reduce the STT, in order to reduce the transaction cost. In 2004, the government had introduced STT on transactions in different types of securities. Currently, the rate varies from 0.0025% to 0.25% depending upon the type of security traded and transaction i.e. whether sale or purchase.
The collections from STT have declined by 17.9% to Rs 2,958 crore in the April-October 2011 compared to Rs 3,602 crore in the April-September 2010. This fall in the collections is mainly because of the fall in transactions on the bourses.
The stack exchanges had asked the ministry of finance to remove the STT, arguing that such a step would help boost investments in the stock market and promote an equity culture in the India. The bourses also asked simpler compliance procedures and imposition of lower costs on brokers to facilitate grater retail participation in the market.
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