2 min read.Updated: 22 Jul 2021, 04:54 PM ISTLivemint
Data from the finance ministry showed that FY22 June quarter STT collection maintained its upward trajectory seen in the financial year ended March, emerging as a high-growth revenue source
NEW DELHI :
Centre’s revenue collection from securities transaction tax (STT) has dodged the sluggishness in revenue receipts from corporate and personal income taxes, and goods and services tax (GST), and is showing the potential for further upswing in FY22.
Data from the finance ministry showed that FY22 June quarter STT collection maintained its upward trajectory seen in the financial year ended March, emerging as a high-growth revenue source, although over a base comparatively smaller than others such as corporate tax and personal income tax. Revenue trend from STT shows that the equity market boom during the pandemic has benefited the exchequer.
STT receipts grew 37% in FY22 to ₹16,927 crore from the year-ago period, while corporate tax receipts contracted 18% and personal income tax by 2%, dented by the pandemic. In the April to June period of 2021, STT collections at ₹5,373 crore reached 31% of what was collected in entire FY21. In the case of both personal and corporate income tax receipts, the receipts in the same period were about a fourth of the full year collections in the last fiscal, showed data from the finance ministry. India collected ₹1.2 trillion each in personal and corporate income tax in the June quarter of FY22.
The only other sources of tax revenue that are showing growth are central excise duty, mostly from petrol and diesel, and basic customs duty. Excise collections received a boost because of an increase in the duty rate last fiscal. Industry representatives attribute improvement in commodity prices for growth in customs duty and for a partial recovery in GST receipts.
According to experts, the growth in STT collections can be tracked to the volume growth in cash and derivative markets in the last two years, a big growth in D-MAT accounts and renewed foreign portfolio investor interest in the long-term India story.
“STT collections have remained in growth trajectory for the last two years and are headed towards a ₹20,000 crore mark in FY22 and emerge as a significant contributor to the tax kitty and as an important arsenal of tax collection," said Aravind Srivatsan, partner and tax leader, Nangia Andersen LLP, a consultancy.
With diminishing returns from bank deposits and markets offering better returns, the stock markets have naturally emerged as a preferred route to invest in both direct and indirect terms (through mutual funds and alternative investment funds) resulting in market capitalization of BSE-listed firms topping the $3 trillion mark for the first time, explained Srivatsan. The market capitalization of BSE-listed firms touched the $3 trillion mark on 24 May, news agency PTI had reported on 30 June. Major initial public offerings lined up this year, including of LIC, and the government’s ₹1.75 trillion disinvestment are expected to boost STT receipts this year.
The BSE-Sensex which was below 26,000 points in March 2020, closed trading on Thursday at 52,837.21 points, gaining around 638 points from the previous day’s close.