Supreme Court Issues Notice On Plea Challenging Constitutionality Of Securities Transaction Tax

The Supreme Court today issued notice to the Centre on a writ petition challenging the constitutional validity of the Securities Transaction Tax (STT), a tax on buying and selling stocks and other securities on Indian stock exchanges, imposed under the Finance Act, 2004.

A bench of Justice JB Pardiwala and Justice KV Vishwanathan issued notice returnable in four weeks.

“The principal argument canvassed before us is that the Securities Transaction Tax is the only tax levied in the country on the mere act of carrying out a profession and is sought to be levied irrespective whether there is a profit derived or not. This, according to the petitioner, renders the levy almost punitive or deterrent in nature. Otherwise, according to the petitioner, all other taxes in India are levied on the profit at the year-end but the STT is levied even if the stock market trader is operating in a loss. Issue notice, returnable in four weeks”, the Court recorded.

The writ petition has been filed by a stock market trader named Aseem Juneja seeking a declaration that STT is unconstitutional as it violates fundamental rights guaranteed under Articles 14, 19(1)(g), and 21 of the Constitution.

In the alternative, Juneja has prayed for a direction to adjust STT paid during a financial year against short-term or long-term capital gains tax liability, in the same manner as Tax Deducted at Source (TDS) is adjusted for salaried professionals.

Juneja has contended that STT amounts to double taxation since a trader is liable to pay capital gains tax on profits and is also required to pay STT on the same transaction.

He points out that while Short-Term Capital Gains tax or Long-Term Capital Gains tax is paid on profits from trading, STT (0.1% on both buy and sell sides for delivery trades) is levied separately, leading to two taxes on the same transaction.

His petition further contends that STT is unique because it applies irrespective of whether a trader makes a profit or incurs a loss, making it punitive in nature.

“STT is applicable on the rupee amount of shares bought or sold and not the actual profit. There is no other tax in India where a professional is taxed even if the professional makes a loss and not a profit. Such a tax levied on not profit but the mere transaction is grossly arbitrary and violates article 14, 21 and 19(1)(g). In the instant writ, the Petitioner is the professional who is making a living by trading securities in the stock market”, the plea states.

The petition compares STT to taxing a doctor not only on annual profits but also on each individual consultation fee received, even if the practice ultimately runs at a loss.

The petition also states that STT was introduced in 2004 to curb tax evasion in the stock market and was intended to operate like TDS. However, unlike TDS which is adjusted against final tax liability or refunded, STT has no such provision, forcing traders to pay both STT and capital gains tax, the petition submits.

The petition contends that major financial markets such as the USA, Germany, Singapore, and Japan do not impose a securities transaction tax.

The petition prays that the Supreme Court either strike down STT altogether or direct that it be adjusted against capital gains tax liability.

Case no. – W.P.(C) No. 657/2025

Case Title – Aseem Juneja v. Union of India

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