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.