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Consider the following statements with reference to Securities Transaction Tax (STT):
- It is a type of financial transaction tax levied on transactions done on the domestic stock exchanges.
- The rates of STT are decided by the Securities and Exchange Board of India (SEBI).
- It is not applicable in case of Currency derivatives.
Which of the statements given above are correct?
- a)1 and 2 only
- b)2 and 3 only
- c)1 and 3 only
- d)1, 2 and 3
Correct answer is option 'C'. Can you explain this answer?
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Most Upvoted Answer
Consider the following statements with reference to Securities Transac...
Securities Transaction Tax (STT) is a type of financial transaction tax levied in India on transactions done on the domestic stock exchanges. STT is levied on the purchase or sale of shares and other trade-able securities of the companies listed on the stock exchange.
So, statement 1 is correct. The Central / Union Government prescribes the rates of STT through its Budget from time to time. In tax parlance, this is categorised as a direct tax.
So, statement 2 is not correct. As on date, STT is not applicable in case of preference shares, Government securities, bonds, debentures, currency derivatives, units of mutual fund other than equity oriented mutual fund, and gold exchange- traded funds and in such cases, the tax treatment of short-term and long-term gains shall be as per normal provisions of law.
So, statement 3 is correct. Therefore, the correct answer is (c).
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Community Answer
Consider the following statements with reference to Securities Transac...
The correct answer is option 'C' - 1 and 3 only.
Explanation:
Securities Transaction Tax (STT) is a type of financial transaction tax levied on transactions done on the domestic stock exchanges. It was introduced in India in 2004 with the aim of generating revenue for the government and discouraging speculative trading in the stock market.
Statement 1: It is a type of financial transaction tax levied on transactions done on the domestic stock exchanges.
This statement is correct. STT is levied on transactions such as buying or selling of equity shares, futures and options contracts, and mutual fund units on the domestic stock exchanges. The tax is deducted at the time of transaction and is payable by the buyer or seller, depending on the type of transaction.
Statement 2: The rates of STT are decided by the Securities and Exchange Board of India (SEBI).
This statement is incorrect. The rates of STT are not decided by SEBI. The rates of STT are determined by the Central Government through the Finance Act. The rates may vary depending on the type of transaction and the nature of the security being traded. For example, the rate of STT for equity shares is different from that for futures and options contracts.
Statement 3: It is not applicable in case of Currency derivatives.
This statement is correct. STT is not applicable on transactions of currency derivatives. Currency derivatives are financial instruments whose value is derived from the underlying foreign exchange rates. Since currency derivatives are not considered as securities, they are exempted from the levy of STT.
In conclusion, statement 1 and statement 3 are correct, while statement 2 is incorrect. Therefore, the correct answer is option 'C' - 1 and 3 only.
Explanation:
Securities Transaction Tax (STT) is a type of financial transaction tax levied on transactions done on the domestic stock exchanges. It was introduced in India in 2004 with the aim of generating revenue for the government and discouraging speculative trading in the stock market.
Statement 1: It is a type of financial transaction tax levied on transactions done on the domestic stock exchanges.
This statement is correct. STT is levied on transactions such as buying or selling of equity shares, futures and options contracts, and mutual fund units on the domestic stock exchanges. The tax is deducted at the time of transaction and is payable by the buyer or seller, depending on the type of transaction.
Statement 2: The rates of STT are decided by the Securities and Exchange Board of India (SEBI).
This statement is incorrect. The rates of STT are not decided by SEBI. The rates of STT are determined by the Central Government through the Finance Act. The rates may vary depending on the type of transaction and the nature of the security being traded. For example, the rate of STT for equity shares is different from that for futures and options contracts.
Statement 3: It is not applicable in case of Currency derivatives.
This statement is correct. STT is not applicable on transactions of currency derivatives. Currency derivatives are financial instruments whose value is derived from the underlying foreign exchange rates. Since currency derivatives are not considered as securities, they are exempted from the levy of STT.
In conclusion, statement 1 and statement 3 are correct, while statement 2 is incorrect. Therefore, the correct answer is option 'C' - 1 and 3 only.
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Consider the following statements with reference to Securities Transaction Tax (STT): It is a type of financial transaction tax levied on transactions done on the domestic stock exchanges. The rates of STT are decided by the Securities and Exchange Board of India (SEBI). It is not applicable in case of Currency derivatives.Which of the statements given above are correct?a)1 and 2 onlyb)2 and 3 onlyc)1 and 3 onlyd)1, 2 and 3Correct answer is option 'C'. Can you explain this answer?
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