The Supreme Court has issued notice to the Centre on a plea challenging the constitutional validity of STT. The petitioner argues STT causes double taxation and penalizes traders even when in loss.
New Delhi: The Supreme Court of India on Monday, October 6, 2025, agreed to hear a petition that questions the constitutional validity of the Securities Transaction Tax (STT). This is a direct tax charged on every trade made through a listed stock exchange, first introduced under the Finance Act, 2004.
A Bench led by Justice J.B. Pardiwala has issued notice to the Union Government, specifically to the Ministry of Finance, on a plea filed by Aseem Juneja.
The petitioner, represented by advocate Siddhartha K. Garg, has argued that the Securities Transaction Tax violates key fundamental rights, such as the right to equality, the right to trade or earn a livelihood, and the basic right to live with dignity.
The petition made it clear that the challenge to STT is not about whether the rate of taxation is high or whether the burden has increased in recent years.
It stated,
“The current petition is instead questioning the legality of the tax imposed in the form of STT… Firstly, it violates the principle of double taxation as the petitioner (a stock market trader) pays capital gains tax on the profit made in the market and then also has to pay STT, over and above this capital gains tax already paid on the same transaction.”
The plea further highlighted that STT is different from most other taxes in India because it is charged simply for participating in the stock market, regardless of whether one makes a profit.
Juneja submitted that,
“STT was the only tax in India which was imposed on the sheer act of carrying out a profession and has to be paid irrespective of whether there is a profit made or not, which makes it almost punitive or deterrent in nature.”
The petition also pointed out that while other taxes are calculated at the end of a financial year, STT is charged instantly on every single transaction—even if the trader suffers losses.
It said,
“Every tax in India is on the profit at the year-end but STT is applicable even if the stock market trader is operating in a loss. STT was introduced in 2004 to combat tax evasion in the stock market. This means that STT to stock market participants is what TDS is to salaried individuals. But the problem is that the TDS is refunded at the end of the year or adjusted with the income tax but no such provision is made for STT and the trader has to pay both.”
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By framing STT in this manner, the petitioner has essentially argued that the tax is unfair, disproportionate, and unconstitutional.
The Supreme Court will now examine these issues and hear the government’s response after the notice issued to the Ministry of Finance.
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