In a significant development, the Supreme Court of India announced on Monday, October 6, 2025, that it would review a petition contesting the constitutional legality of the Securities Transaction Tax (STT). This direct tax, introduced by the Finance Act of 2004, is applied to all securities transactions conducted through recognized stock exchanges.
A bench led by Justice J.B. Pardiwala formally issued notice to the Union Government, specifically the Ministry of Finance, regarding the plea. Petitioner Aseem Juneja, represented by advocate Siddhartha K. Garg, argues that the STT infringes upon fundamental rights, including the right to equality, the right to pursue a profession or earn a livelihood, and the basic right to live with dignity.
The petition emphasizes that its challenge to the STT isn’t merely about increased or high taxation on stock market participants. Instead, it delves into the fundamental fairness and legal basis of the tax itself.
Specifically, Juneja’s plea questions the very legality of the STT on two key grounds. Firstly, it claims the tax leads to ‘double taxation.’ The petitioner, a stock market trader, contends that they are forced to pay capital gains tax on their market profits and then incur the STT on the very same transaction, effectively being taxed twice for the same income.
Secondly, Mr. Juneja highlights that the STT is unique in India as it is levied simply for engaging in a profession, regardless of whether a profit is made. This makes the tax feel ‘punitive or deterrent’ rather than a standard income-based levy.
While most taxes in India are applied to year-end profits, STT stands out because it must be paid even if a stock market trader incurs a loss. Initially introduced in 2004 to curb tax evasion in the stock market, the petition draws a comparison to Tax Deducted at Source (TDS) for salaried individuals. However, unlike TDS, which is either refunded or adjusted against income tax, there’s no such provision for STT, forcing traders to pay both, even in adverse financial situations.