The finance ministry today said it might tag the securities transaction tax (STT) with the capital gains tax, or continue to levy it in its existing form.
“We will calibrate it later on. Whichever is convenient to revenue, whether to continue STT or tag it on to capital gains tax, that call we will take,” Central Board of Direct Taxes Chairman S S N Moorthy told reporters.
The revised discussion paper released on the Direct Taxes Code (DTC) on Tuesday had said that STT is a tax on specified transactions and not on income, and thus it would be adjusted in accordance with the revised rate of taxation on capital gains. At present, STT is levied at 0.010 per cent per transaction in the derivatives market.
“Accordingly, STT is proposed to be calibrated based on the revised taxation regime for capital gains and flow of funds to the capital market,” the paper had said.
Asked why STT is proposed to be retained along with the long-term capital gains tax, Moorthy said STT is a different arrangement than the capital gains tax. “STT is a different legislation. It is not part of the Income Tax Act per se. It is a separate arrangement, so we have kept it as it is. Let us see how we are going to calibrate the capital gains tax, then we will take a call on STT,” he said.