Veteran Indian investor Vijay Kedia said the government should abolish the Securities Transaction Tax (STT) to simplify market taxation [1].
The proposal targets a fundamental shift in how India's capital markets operate. By reducing the financial burden on traders and investors, Kedia suggests the move could democratize market access and encourage a broader base of retail participation [1].
Kedia argues that high transaction costs currently act as a deterrent for smaller investors [2]. He said that simplifying the tax structure would not only lower the barrier to entry, but also boost the overall depth of the national stock market [1].
According to Kedia, the removal of the STT is necessary to support long-term economic growth [2]. He said the current taxation system creates an unnecessary burden that hinders the efficiency of the capital markets [1].
The call for reform comes as India continues to see a surge in new retail brokerage accounts. Kedia believes that a more streamlined tax regime would allow these new participants to engage more effectively with the market [2].
Removing the tax would align India's market structure with several global financial hubs that avoid taxing individual transactions to maintain liquidity [1]. Kedia said that ending the STT is the logical next step for a maturing economy seeking to maximize its financial infrastructure [2].
“Vijay Kedia said the government should abolish the Securities Transaction Tax (STT) to simplify market taxation.”
If the Indian government adopts Kedia's recommendation, it would likely lead to increased trading volumes and higher liquidity in the equity markets. While the abolition of the STT would reduce immediate government revenue from transactions, the long-term goal is to create a more competitive financial ecosystem that attracts more domestic capital and reduces the reliance on foreign institutional investors.
