Veteran investor Vijay Kedia has called for an abolishment of the Securities Transaction Tax (STT), arguing that Indian investors are already burdened with multiple statutory and regulatory charges while participating in capital markets.
In a post on X, Kedia described the levy as an “additional layer of taxation” that has outlived its original purpose.
"STT was introduced as a simplified transaction tax to facilitate easier collection of taxes from capital market transactions. However, over time, it has effectively become an additional layer of taxation alongside other market-related levies," Kedia said.
The market veteran's remarks come amid an ongoing debate around taxation of equity investments following changes in long-term capital gains (LTCG) tax rules in recent years.
Kedia argued that investors already pay a range of mandatory charges including brokerage fees, exchange transaction charges, GST on transaction-related costs, SEBI turnover fees, stamp duty and STT itself.
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“Unlike income tax, STT is payable irrespective of whether an investor makes a profit or a loss. The investor pays the tax simply for participating in the market,” he noted.
Introduced in 2004, STT is levied on the purchase and sale of securities listed on Indian stock exchanges. The tax was originally designed to simplify tax collection and reduce evasion in securities transactions.
However, Kedia said India's equity markets have evolved significantly since then and called for a review of the tax's relevance in the current market structure.
“India's equity markets have matured significantly since the introduction of STT. The time has come to review its original purpose and reconsider its continued relevance,” he said.
According to Kedia, high transaction costs and multiple layers of taxation discourage broader participation in equities, especially among long-term retail investors.
He added that capital markets play a crucial role in channeling household savings into productive enterprises, supporting entrepreneurship, generating employment and strengthening economic growth.
“Abolishing STT would simplify market taxation, improve capital market efficiency and encourage greater participation in India's growth story,” Kedia said.
The comments are part of a three-part set of suggestions shared by Kedia on measures aimed at strengthening India's capital markets.
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