What is Securities Transaction Tax?
Securities Transaction Tax meaning: Securities Transaction Tax, also referred to as STT, is a tax that is levied on the purchase or sale of shares and other trade-able securities of the companies listed on the stock exchange. Governed under the Securities Transaction Tax Act, or the STT Act, the tax is levied on specifically listed taxable securities including equity, derivatives, units of equity-oriented mutual fund. Introduced in Union Budget 2004 by former Finance Minister P Chidambaram, this transaction tax was imposed in lieu of lower tax on short-term capital gain (LTCG) and ‘nil’ long-term capital gain (LTCG) tax on equities. However, in 2013, the tax rate was cut, following years of protests by brokers as well as the trading community.
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