New Delhi: The government expects to reap rich dividends from the high volatility in the stock markets, with the security transaction tax (STT) likely to touch Rs7,500 crore in the current fiscal.
“Thanks to the action in the stock markets, STT collections rose nearly 75% to Rs5,895 crore till 15 December this year, and are expected to touch Rs7,500 crore in 2007-08,” a senior finance ministry official said.
Finance minister P. Chidambaram had introduced STT in the 2004-05 Budget. All investors in the stock market pay a fixed STT of 0.125% for every transaction in cash for delivery of shares. However, transactions in derivatives trading attract 0.017% tax.
While increase in corporate tax and personal income tax has been attributed to economic growth and higher salaries, STT collections have largely gone up due to an increase in the daily trading at the present high level.
Between April and October, collections registered a growth of 57.61% and stood at Rs3,783 crore. The government is also expecting to cross Rs3 trillion collections from direct taxes as against the Budget estimates of Rs2.67 trillion for 2007-08. According to the Central Board of Direct Taxes, the net collections have already touched Rs2 trillion as on 20 December.