Will the Finance Ministry Scrap Levy on Stock Market Transactions?

Short-term traders are pushing for abolition of the levy on stock market transactions, which squeezes their margins.

The Security Transaction Tax is collected by the broker in addition to the brokerage soon after a trade is completed. (Photo: iStockphoto)

The finance ministry may be considering doing away with the Security Transaction Tax (STT) and has sought views from tax and market experts to that effect, reports The Economic Times. The STT is a levy on transactions done on stock markets.

The government is looking to increase the period of applicability of long-term capital gains tax from one year currently to three years. Tax consultants believe that reconsidering the STT is an offshoot of that move.

The Security Transaction Tax is collected by the broker in addition to the brokerage soon after a trade is completed. There has been a clamour to do away with the levy, especially among short-term traders and arbitrageurs, on the grounds that their margins are being squeezed.

In the 2013-14 Union Budget, the government had cut STT on equities and mutual fund units. In the last few days, top tax experts have been sounded out by the Finance Ministry on the matter.