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 FAQS Relating To Education Cess And Securities Transaction Tax |
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5. From which date is STT applicable?
Ans. STT is leviable on the taxable securities transactions with effect from 1st October, 2004 as per the notification issued by the Central Government.
6. Is surcharge leviable on STT?
Ans. The surcharge is not leviable on the STT.
7. On which taxes is education cess leviable? When is education cess leviable from? Is education cess leviable on STT?
Ans. Education Cess is leviable on all taxes, duties, etc. Education cess is to be levied from 1st April, 2004. No Education Cess is leviable on the STT.
8. Is STT applicable on "Open Offer"?
Ans. No. As explained above, STT is applicable on taxable securities transactions only. The purchase and sale transactions have to be entered on the recognized stock exchanges. As such, in case of "Open Offer" the STT is not leviable since the same are not entered on recognized stock exchanges. Hence, capital gains arising on such transactions will be charged to tax at normal rates applicable to capital gains. However, the long-term capital gains arising on sale of following equity shares are exempt from tax:
(a) equity share in a company which is a constituent of the BSE-500 Index of Mumbai Stock Exchange & such sale is entered in a recognized stock exchange; or
(b) an equity share in a company allotted through public issue on/after 1/03/2003 and listed on recognized stock exchange in India and the sale transaction is entered on a recognized stock exchange.
9. Is STT chargeable on "Buy Back of Shares"?
Ans. No. Since "Buy Back Transactions" are not taxable securities transactions, STT is not chargeable on them because buy back of shares do not take place through recognized stock exchanges. Hence, capital gains arising on such transactions will be charged to tax at normal rates applicable to capital gains. However, the long-term capital gains arising on sale of following equity shares are exempt from tax:
(a) equity share in a company which is a constituent of the BSE-500 Index of Mumbai Stock Exchange, where such sale transaction is entered in a recognized stock exchange; or
(b) an equity share in a company allotted through public issue on/after 1/03/2003 and listed on recognized stock exchange in India, where such sale transaction is entered on a recognized stock exchange.
10. How are Long term /Short term Capital Gains connected to the STT?
Ans. Long term Capital Gains on sale of equity share in a company or a unit of an equity oriented fund. However, such long-term capital gain will be exempt only if the transaction is entered into after 1st October, 2004 and STT is chargeable on such transaction.
Short term Capital Gain on sale of equity share in a company or a unit of an equity-oriented fund is chargeable to income tax at a concessional rate of 10%. However, this benefit is available only if the transaction is entered on/after 1st October, 2004 and STT is chargeable on such transaction.
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