Section 98 of Chapter VII of Finance (No.2) Act, 2004, provides for charge of securities transaction tax (STT). It was provided that in the case of sale of a derivative, where the transaction of such sale is entered into in a recognized stock exchange, the securities transaction tax will be at the rate of 0.017 per cent and will be payable by the seller.
Section 98 and 99 of Chapter VII of the Finance Act, 2004 has now been amended so as to provide that –
(i) in case of sale of an option in securities, STT shall be levied at the rate of 0.017 per cent of the option premium and shall be paid by the seller;
(ii) in case of sale of an option in securities, where option is exercised, STT shall be levied at the rate of 0.125 per cent of settlement price and shall be paid by the purchaser; and
(iii) in case of sale of a futures in securities, STT shall be levied at 0.017 per cent and shall be payable by the seller.
Applicability: This amendment has been made applicable with effect from 1st June, 2008.
Earlier, the amount of STT paid was allowed as rebate under section 88E of the Income-tax Act. This rebate was allowed when the income from taxable securities transactions was included under the head ‘profits and gains of business or profession’.
It has been decided to discontinue the rebate available to such assessee under section 88-E of the Income-tax Act. Hence, no rebate under section 88E shall be allowed to the assessee in, or after, the assessment year beginning on the 1st day of April, 2009.
Applicability: This amendment has been made applicable with effect from 1st April, 2008.
Further consequential amendment has been made in section 40 by omitting sub-clause (ib) of clause (a), which provides that any sum paid on account of STT under chapter VII of Finance (No. 2) Act, 2004 shall not be allowed as deduction.
Applicability: This amendment has been made applicable with effect from 1st April, 2009 and shall accordingly apply for assessment year 2009-10 and subsequent assessment years.
Further, amendment has been made to provide that any amount of securities transaction tax paid by the assessee during the year in respect of taxable securities transactions entered into in the course of business shall be allowed as deduction under section 36 of the Income-tax Act subject to the condition that such income from taxable securities transactions is included under the head ‘profits and gains of business or profession’.
Applicability: This amendment has been made applicable with effect from 1st April, 2009 and accordingly applies in relation to assessment year 2009-10 and subsequent assessment years.
