SC to Hear Pleas Challenging Securities Transaction Tax

On 6th October 2025, the Supreme Court of India decided to examine a plea challenging the constitutional validity of the Securities Transaction Tax (STT), a direct tax levied on securities transactions through a listed stock exchange under the Finance Act, 2004.

Key Points

Plea Filed: The petition was filed challenging the STT on the grounds that it violates fundamental rights to equality, trade or earning a livelihood, and the basic right to live with dignity.
Challenge Basis: The plea clarified that the challenge is not related to the level of taxation but questions the legality of STT itself, which is imposed over and above capital gains tax, creating an instance of double taxation.
Punitive Nature of STT: The petitioner highlighted that STT is unique in India as it applies to the act of trading irrespective of profit or loss, making it punitive in nature, unlike other taxes which are levied on annual profits.
Comparison with TDS: STT was introduced in 2004 to prevent tax evasion in the stock market. While TDS on salaried individuals is refunded or adjusted at year-end, no such provision exists for STT, compelling traders to pay it in addition to capital gains tax.