Supreme Court Seeks Response from Finance Ministry on Securities Transaction Tax Challenge
New Delhi: The Supreme Court on Monday sought a response from the finance ministry regarding a petition challenging the constitutional validity of the securities transaction tax (STT). This tax is a direct levy on the purchase and sale of securities transacted on recognized stock exchanges in India.
A bench led by Justice JB Pardiwala issued a notice to the Centre in response to a plea by Aseem Juneja, a trader, who alleges that the STT is illegal, uncons titutional, and violates the principle of double taxation. According to Juneja, a stock market trader is required to pay capital gains tax on profits from market transactions, in addition to the STT levied on the same transactions.
Juneja’s petition argues that this situation amounts to double taxation, emphasizing that “STT is the only tax in India imposed on the mere act of carrying out a profession” and must be paid regardless of whether a profit is made.
This aspect, he claims, makes the tax almost punitive or deterrent by nature. Unlike other taxes in India, which are assessed on profits at the year’s end, the STT applies even when a stock market trader incurs losses. Juneja contends that this punitive nature of the STT discourages participation in stock trading.
He further alleges that the STT violates several constitutional rights, including the right to equality, the right to trade or earn a livelihood, and the fundamental right to live with dignity.
The plea alleged that the securities transaction tax violated the principle of double taxation.