STT hike clarified: Govt raises Securities Transaction Tax on options sale to 0.062% from 0.05%; corrects typo

The Finance Ministry has raised Securities Transaction Tax on sale of options to 0.062% from 0.05 % per Rs 1 crore turnover, and on the sale of futures to 0.0125% from 0.010%. The govt clarified that it has corrected a typo error with regard to STT hike on sale of options.

Security transaction tax, finance bill
The Finance bill was passed in Lok Sabha on Friday without discussion.

The Finance Ministry has clarified that it has raised Securities Transaction Tax on the sale of options to 0.062% from 0.05%, ET Now reported citing sources. This a 25% increase. An earlier version of Finance Bill passed in Lok Sabha today had incorrectly said that options sale STT was raied to Rs 2100 from Rs 1700 per Rs 1 crore turnover. This led to confusion in the market as traders discovered the existing STT is already levied at a higher rate of Rs 5000 per Rs 1 crore. On the options side, the STT is charged on the premium and not the strike price.

On the sale of futures contracts, the STT has been hiked to Rs 1,250 on Rs 1 crore of turnover against the earlier levy of Rs 1,000. The Finance bill 2023 with 64 official amendments was passed in Lok Sabha on Friday without discussion giving effect to tax proposals amid a ruckus by opposition members.

With the clearance of the Finance Bill now the government will treat all gains, from mutual funds that have less than 35% of the money in equity, as short-term capital gains. At present, long-term capital gains on debt funds are taxed at either 10% without the indexation benefit or 20% with the indexation benefit.

Additionally, the finance minister proposed setting up a committee to look into issues related to the pension for government employees and said that credit card payments for foreign tours are not being captured under LRS and the Reserve Bank of India (RBI) will look into the matter. Lok Sabha also cleared changes in the Finance Bill to pave the way for setting up an appellate tribunal for the resolution of disputes under GST.

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First published on: 24-03-2023 at 13:15 IST