© Reuters.
The Union government’s Securities Transaction Tax (STT) collections for fiscal year 2024 (FY24) are poised to surpass budget estimates, with Rs 14,000 crore ($1.86 billion) already collected in the first half of FY24 (H1FY24). This performance is attributed to stock market buoyancy, increased STT rates, and a surge in new investors.
The Nifty50’s gain of 13%, record highs of Sensex, and significant rises in Nifty Midcap 100 and Smallcap 100 during April-September 2023 underscore the market’s vibrancy. Notably, the addition of 10 million unique investors and an increase in Initial Public Offerings (IPOs) have amplified trading volumes, contributing to a record swing observed in the Nifty 50 index.
The FY24 Budget’s decision to raise STT by 25% on options and futures sales has stimulated trading activity, leading to the best first-half performance since H1FY21. Officials are now predicting a potential rise in the Revised Estimate for STT for FY24 due to these factors and an overall increase in net direct tax collection.
In the previous fiscal year (FY23), actual STT collection also surpassed estimates. Finance Minister Nirmala Sitharaman views these trends as indicative of the health of large industries and listed companies, which instills confidence in small investors. The government also recognizes STT as part of personal income taxes.
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