Securities Transaction Tax collection jumps 75% despite market volatility

While STT mobilisation was Rs 16,634 crore connected July 11, 2024, it jumped to Rs 30,630 crore connected October 10, Rs 35,923 crore connected November 10 and Rs 40,114 connected December 17.

The BSE Sensex which was astatine 80,429.04 connected July 23 past twelvemonth deed an all-time highest of 85,978.25 connected September 27 past twelvemonth earlier correcting to 76,499.63 connected January 14, 2025.

The summation successful STT, which is levied connected transactions successful specified securities, came astatine a clip erstwhile the Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI) raised concerns implicit the emergence successful volumes successful futures and options segment, which tin airs a hazard to macroeconomic stability.

The accrued STT collections are besides adding to the gross kitty of the government. With Rs 44,538 crore collected truthful far, STT gross has already breached the fund estimation of Rs 37,000 crore for the ongoing fiscal twelvemonth 2024-25. In the erstwhile fiscal twelvemonth 2023-24, the STT gross was estimated to beryllium Rs 32,000 crore (revised estimate) and Rs 25,085 crore successful 2022-23.

STT connected futures and options of securities was accrued to 0.02 per cent and 0.1 per cent respectively. Earlier, the complaint of levy of STT connected the merchantability of an enactment successful securities was 0.0625 per cent of the enactment premium, portion the complaint of levy of STT connected the merchantability of a aboriginal successful securities was 0.0125 per cent of the terms astatine which specified futures are traded. The complaint of levy of STT connected transportation trades successful equity shares is 0.1 per cent connected some acquisition and merchantability transactions.

However, the premium turnover successful F&O declined since aft the Sebi slapped restrictions connected derivative trading successful the aftermath of rampant excessive speculation by retail investors – it declined from Rs 54.38 lakh crore successful September 2024 to Rs 43.99 lakh crore successful December 2024, and to Rs 17.47 lakh crore successful January 2025 (till January 14th) connected the NSE.

“Retail investors were progressive successful the currency marketplace and communal funds besides pumped wealth into the marketplace arsenic they received immense inflows contempt the volatility successful the market. The STT postulation figures amusement that it has nary correlation with the marketplace autumn oregon rise. STT accrued erstwhile the marketplace roseate and besides erstwhile it aboriginal declined,” said an analyst.

In fact, the Rs 4,424 crore emergence successful STT postulation from December 17 to Rs 44,538 crore by January 12 happened astatine a clip erstwhile the BSE Sensex witnessed a correction of implicit 3,000 points. Since STT is charged lone to the seller, connected a round-trip premium turnover of Rs 10,000 successful options STT accrued from Rs 6.25 to Rs 10. Similarly, successful futures, STT led to an summation from Rs 1.25 to Rs 2 for each Rs 10,000 of turnover.

When retail investors flooded the F&O conception 3 years ago, argumentation makers were disquieted astir losses to them. Nine retired of 10 investors were losing wealth successful this segment. While STT postulation has accrued successful the past 5 months, large marketplace players are lobbying for a simplification successful the levy.

Association of Mutual Funds successful India (AMFI) successful its connection for the Budget 2025-26 has requested for simplification successful STT for arbitrage funds and equity savings funds. “For communal funds arsenic an investor, the STT connected futures and options should beryllium reinstated to the earlier rates,” AMFI said successful the proposal.

The communal money assemblage said that arbitrage and equity savings funds chiefly usage futures and options for hedging arsenic the underlying assets. “The disposable arbitrage has present been reduced owed to an summation successful abbreviated word superior summation tax. Further, the accrued STT connected futures volition adhd to the outgo of these funds,” it said.