The government had announced in the Union Budget this year to increase the Securities Transaction Tax (STT) on futures and options deals. This increase has come into effect from October 1, 2024. Experts related to stock markets believe that due to STT the cost of investing in shares increases. Actually, this is a kind of tax, which is applicable on buying and selling of shares. This also applies to F&O deals along with delivery based stock transactions.
Rs 40000 crore revenue from STT
to the government STT Rs 40,114 crore has been received from this year between April 1 and December 17. STT collection increases when the volume increases in the stock markets. STT is levied on every transaction taking place in the stock exchange and this money is transferred to the government. In this way it is a source of revenue for the government. However, the money received from STT is very less compared to other taxes. Experts say that its removal may increase the interest of investors in the stock market.
STT rates on share transactions
In the Union Budget presented in July, the government had increased the STT rate on selling options from 0.0625 per cent to 0.1 per cent. It seems to be at a premium. This means that if you sell an option whose premium is Rs 100, then you will have to pay STT of 10 paise on it. On sale of futures it has been increased to 0.02 percent. It is calculated on trade price. This means that if you sell a futures contract worth Rs 1 lakh, you will have to pay STT of Rs 20 on it. STT is 0.1 per cent on transactions involving delivery of shares. This is applicable on both the buyer and the seller of the share. 0.025 per cent STT is applicable on intra-day trades.
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Why is there demand to remove STT?
PHDCCI has advised Finance Minister Nirmala Sitharaman to remove STT in pre-budget discussions. The Industry Chamber says that removal of STT will reduce the cost of investing in shares. This will increase people’s interest in investing in stock markets. The stock market has continued to decline since October. Due to this, the sentiment of investors is quite weak. If Finance Minister Nirmala Sitaram announces the removal of STT in the Union Budget on February 1, 2025, then it may have a positive impact on market sentiment.