Securities Transaction Tax (STT) – Draft Rules, 2004
Summary
This document comprises a SEBI circular and the draft Securities Transaction Tax Rules, 2004, mandating stock exchanges and mutual funds to implement STT systems. The rules define taxable transactions for equity shares and units based on specific settlement modes like netted or trade-for-trade. It establishes procedures for calculating tax values, rounding off amounts, and identifying responsible parties for collection and payment. This section details the technical specifications for computer media submission of returns, including storage formats and virus certification. It establishes that Mutual Fund trustees or authorized managers are responsible for filing returns by June 30th following the financial year. The text further outlines signing authorities for returns, procedures for notices regarding late filings, demand notices, refund timelines, and appeal forms. This part contains Form No. 2 for the return of taxable securities transactions by mutual funds, including verification details. It includes Form No. 3, a notice of demand specifying payment deadlines, interest liabilities, and penalties under the Finance (No.2) Act, 2004. Finally, it provides Form No. 4 for filing an a
Text
These rules may be called the Securities Transaction Tax (draft) Rules and shall come into force on the day of , 2004.
“Act” means the Finance (No.2) Act, 2004; “authorised bank” means any bank appointed by RBI under section 45 of the Reserve Bank of India Act, 1934; “Form” means a Form set out in the Appendix.
Words and expressions used but not defined in these Rules and defined in the Act, or the Securities Contracts (Regulation) Act, 1956, or the Income -tax Act, 1961, shall have the meanings respectively assigned to them in those Acts.
Where the equity share or unit is purchased or sold by a person on a trading day in the netted settlement mode, the value is determined by calculating the volume weighted average price of that equity share or unit for that person for that day.
where the equity share or unit is purchased or sold by a person in the trade-for-trade settlement mode, the value of the taxable securities transaction shall be the price at which the equity share or unit is purchased or sold.
where the equity share or unit is purchased in the auction settlement mode, the value of the taxable securities transaction shall be the volume weighted average price of the equity share or unit, determined in the manner specified in clause (a).
where the equity share or unit is sold in the auction settlement mode, the value of the taxable securities transaction shall be the price at which the equity share or unit is sold.
For the removal of doubts, it is hereby clarified that the determination of the value of the taxable securities transaction under this clause in a case where the equity share or unit is purchased or sold through a member of the stock exchange, shall be made with reference to the trades executed in the equity share or unit under a particular client Code through that member.
The value of taxable securities transaction and the amount of securities transaction tax, interest and penalty payable, and the amount of refund due... shall be rounded off to the nearest rupee... if such part is fifty paise or more, it shall be increased to one rupee and if such part is less than fifty paise it shall be ignored.
In the case of a Mutual Fund, the person responsible for colle ction and payment of securities transaction tax... shall be the trustee of the Fund, or such other person managing the affairs of the Mutual Fund as may be duly authorised by the trustee in this behalf.
Every recognised stock exchange, or, as the case may be, the trustee of every Mutual Fund or the person authorised by the trustee... shall pay the amount of such tax to the credit of the Central Government by remitting it into any branch of the Reserve Bank of India or of the State Bank of India or of any authorised bank accompanied by a securities transaction tax challan.
The return of taxable securities transactions required to be furnished under sub-section (1) of section 101 of the Act shall, in the case of a recognised stock exchange, be in Form No. 1... in the case of a Mutual Fund, be in Form No. 2...
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Source: SecMarx — Securities Transaction Tax (STT) – Draft Rules, 2004. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.