Market Expert Vijay Kedia Advocates for Simplified Taxation Structure

Veteran Investor Urges Abolition of Securities Transaction Tax

Vijay Kedia, a veteran investor, has called for the abolition of the Securities Transaction Tax (STT) as part of his suggestions to Finance Minister Nirmala Sitharaman and the Ministry of Finance to strengthen India's capital markets. This is the third and final part of his recommendations, aimed at making Indian capital markets more efficient and investor-friendly.

STT was originally introduced as a simplified transaction tax to facilitate easier collection of taxes from capital market transactions. However, over time, it has evolved into an additional layer of taxation rather than a simplification measure. Kedia argues that the tax has outlived its original purpose and now acts as an additional burden on investors.

According to Kedia, investors already bear a host of charges while participating in the stock market, including brokerage fees, exchange transaction charges, GST on transaction-related charges, SEBI turnover fees, stamp duty, and STT itself. What was once intended to simplify taxation has effectively become a permanent duplication.

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One of the key concerns highlighted by Kedia is that STT is payable regardless of whether an investor earns a profit or suffers a loss. Unlike income tax, which is linked to earnings, STT is charged merely for executing a transaction in the market. This distinction is significant because transaction costs can directly affect investment returns, particularly for retail investors who may already be operating with limited capital.

Removing STT could encourage broader participation in equity markets and strengthen the role of capital markets in supporting economic growth. Kedia believes that reducing transaction costs could improve capital market efficiency and encourage greater participation in India's growth story. India's stock markets serve as an important channel through which household savings are directed towards businesses seeking capital for expansion, supporting entrepreneurship, job creation, innovation, and overall economic development.

India today has one of the most sophisticated market infrastructures in the world, with seamless digital onboarding, real-time surveillance, automated tax reporting, and extensive regulatory oversight. In this changed environment, Kedia argues that policymakers should reassess whether STT remains necessary. Abolishing STT would simplify market taxation, improve capital market efficiency, and encourage greater participation in India's growth story.

Kedia's latest recommendation completes a series of suggestions aimed at making Indian capital markets more efficient and investor-friendly.

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