The exchequer is starting to feel the heat of the meltdown. As on October 31, collections from the securities transaction tax (STT)?levied at 0.017-0.125% levied on all securities trades?stood at Rs 3,722 crore, a 1.6% decline from Rs 3,784 crore in the same period last year. The government hopes to collect Rs 9,000 crore from the STT in 2008-09. Although it accounts for only 2.27% of total direct taxes, the STT has been a stable indicator of overall tax receipt trends for each year.
The dip in STT collections is on account of lower valuations and the fall in equity markets, tax officials explained. In September, collections increased a paltry 2.27% to Rs 3,182 crore. The Sensex dipped to 12,860 points on September 30 from a high of 15,049 at the beginning of that month. In contrast, last December, when the BSE Sensex breached 20,000 points, STT collections rose by 75%.