STT mop up exceeds budget target by 40% by mid-December

The securities transaction tax (STT) collection has exceeded the budget target for the full fiscal by nearly 40 per cent as of mid-December on the back of increased retail participation in the stock market.

The STT collection as on December 16 stood at Rs 17,329 crore as against the budget target of Rs 12,500 crore. In fact, it has posted a growth of 52 per cent over the previous year's mop up of Rs 11,430 crore. The STT collection is more than double that of the pre-Covid year 2019-20, when it stood at Rs 8,130 crore.

"The markets have been overheated post Covid. More people are investing in the stock market. Besides, there is positive sentiment around economic recovery (which) is aiding higher than expected revenues like telecom industry and production-linked incentive schemes for the auto sector are all positive," said a government official.

The STT is a direct tax payable on the value of taxable securities transactions done through a stock exchange. It is levied at 0.1 per cent of turnover for delivery-based equity transactions, while for intra-day transactions, the STT for purchase is nil. For sale, STT is levied at 0.025 per cent of the turnover.

The direct tax mop up, net of refunds, grew by 61 per cent and stood at Rs 9.45 lakh crore as on December 16 after the third installment of advance tax was paid.

This is about 85 per cent of the Rs 11.08 lakh crore direct tax revenue estimated in the budget for the current fiscal. The collections in the current fiscal are 40 per cent higher than in the corresponding period in 2019-20, the pre-Covid year.