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NEW DELHI : Revenue receipts of the Centre from Securities Transaction Tax (STT) levied on purchase and sale of listed shares has surged 25% year-on-year so far this fiscal, indicating the surge in market activity, showed official data.

STT collection in the current fiscal grew to 21,231 crore as on 15 February, compared to the full year receipt of Rs. 16,927 crore in FY21, showed data from the finance ministry. This 25% surge in STT collection comes on top of a 37% year-on-year jump seen in FY21.

The surge in STT collection indicates the rising market activity, trade volumes and buoyancy, said experts. “STT is levied on purchase and sale of listed securities on the gross consideration. It is paid by both the buyer and the seller. The improvement in receipts show robust market activity and buoyancy. The capital markets have become more broad-based in recent years with increased retail investor participation," said Amit Singhania, partner, tax at law firm Shardul Amarchand Mangaldas.

STT levied at the rate of 0.1% to 0.001% depending on the nature of the security, has emerged as a key contributor to the exchequer even as capital market delivered attractive returns in recent years. Market volume growth also indicates the growing preference for financial savings linked to the capital market which is regarded as more risky compared to historic preferences for gold and property, which are considered safer. Greater retail participation is seen to be a buffer against market volatility induced by fund outflows due to external reasons.

Data also showed that corporate and personal income tax collections have rebounded in FY22 after a dip in FY21. However, central excise duty receipts showed a decline indicating the impact of the sharp duty cut announced early in November to help cool retail prices of petrol and diesel. Excise duty collection in FY22 as of 15 February stood at 3.3 trillion, a contraction of over 14% from the full year receipts in FY21. In FY21, excise duty had surged to 3.8 trillion, a jump of 63% from the year ago period.

Data also showed that the share of taxes collected and deducted at source (TCS and TDS) at the time of transactions has been growing. The Income tax department has been gradually scaling up the coverage of TCS and TDS as part of its oversight of economic activities for better tax compliance.

 

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