Supreme Court to Examine Constitutional Validity of Securities Transaction Tax

The Supreme Court on Monday agreed to examine a plea challenging the constitutional validity of the Securities Transaction Tax (STT) levied on stock market participants, seeking a response from the Centre.

The petition, filed by trader Aseem Juneja, contends that STT violates the principle of double taxation and imposes an unfair burden on traders, including in cases of financial loss.

Introduced in 2004, STT is currently charged at 0.1% on both buy and sell transactions in the stock market.

A bench comprising Justices J B Pardiwala and K V Viswanathan issued notice to the Centre and sought a detailed response from the Ministry of Finance regarding the claims that STT is illegal and unconstitutional.

Advocate Siddhartha K Garg, representing Juneja, argued before the court that STT is punitive in nature and discourages trading activity. He highlighted that such a tax is not levied in other major financial markets and pointed out that it is imposed regardless of whether a trader makes a profit or incurs a loss.

“STT is the only tax in India imposed on the mere act of carrying out a profession and has to be paid irrespective of profit, making it almost punitive or deterrent in nature,” Garg told the bench.

The court’s notice marks the beginning of a detailed examination of STT’s constitutional validity, which could have implications for millions of traders and investors across India.

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