SECURITIES TRANSACTION TAX RULES, 2004

NOTIFICATION NO. SO 1059(E), DATED 28-9-2004

In exercise of the powers conferred by sub-section (1) read with sub-section (2) of section 114 of the Finance (No. 2) Act, 2004 (23 of 2004), the Central Government hereby makes the following rules for carrying out the provisions of Chapter VII of the said Act relating to securities transaction tax. namely :—

S.1 Short title and commencement.

(1) These rules may be called the Securities Transaction Tax Rules, 2004.

(2) They shall come into force on the 1st day of October, 2004.

S.2 Definitions.

(1) In these rules, unless the context otherwise requires,—

(a) "Act" means the Finance (No. 2) Act, 2004 (23 of 2004);

(b) "authorised bank" means any bank as may be appointed by the Reserve Bank of India as its agent under the provisions of sub-section (1) of section 45 of the Reserve Bank of India Act, 1934 (2 of 1934); 

(c) "Form" means a Form set out in the Appendix to these rules.

(2) Words and expressions used and not defined in these rules but 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.

S.3 Value of taxable securities transaction.

For the purposes of clause (c) of section 99 of the Act, the value of a taxable securities transaction, being a purchase or sale of an equity share in a company or a unit of an equity oriented fund, entered into in a recognised stock exchange, shall be determined in the following manner, namely:

(a) where the equity share or unit is purchased or sold by a person on a trading day in the netted settlement mode,—

(i) the quantity of shares or units purchased or sold in each trade in that equity share or unit executed by the person on that day, shall be multiplied by the price at which the trade is executed, to determine the trade value of each such trade;

(ii) the aggregate trade value of all trades in the equity share or unit by the person on that day shall be arrived at by totalling the trade values determined under sub-clause (i);

(iii) the aggregate trade value arrived at under s

S.4 Rounding off value of taxable securities transaction, securities transaction tax, etc.

The value of taxable securities transaction and the amount of securities transaction tax, interest and penalty payable, and the amount of refund due, under the provisions of Chapter VII of the Act shall be rounded off to the nearest rupee and, for this purpose, where such amount contains a part of a rupee consisting of paise then, 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.

S.5 Person responsible for collection and payment of securities transaction tax in case of a Mutual Fund.

In the case of a Mutual Fund, the person responsible for collection and payment of securities transaction tax in accordance with sub-sections (2), (3) and (4) of section 100 of the Act, 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.

S.6 Payment of Securities Transaction Tax.

Every recognised stock exchange, or, as the case may be, the trustee of every Mutual Fund or such other person managing the affairs of the mutual fund as may be duly authorised by the trustee in this behalf, who is required to collect and pay securities transaction tax under section 100, 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.

S.7 Return of taxable securities transactions.

(1) The return of taxable securities transactions required to be furnished under sub-section (1) of section 101 of the Act shall,

(a) in the case of a recognised stock exchange, be in Form No. 1 and be verified in the manner indicated therein;

(b) in the case of a Mutual Fund, be in Form No. 2 and be verified in the manner indicated therein.

(2) The particulars required to be furnished in the schedules to Form No. 1 and Form No. 2 referred to in sub-rule (1) shall be furnished on a computer media, in accordance with the following,

(a) the computer media conforms to the following specifications :—

(i) CD ROM of 650 MB capacity or higher capacity; or

(ii) 4mm 2GB/4GB (90M/120M) DAT Cartridge, or 

(iii) Digital Video Disc;

(b) if the data relating to the schedules is copied using data compression or backup sof

S.8 Return by whom to be signed.

The return under sub-section (1) of section 101 of the Act shall be signed and verified—

(a) in the case of a recognised stock exchange—

(i) being a company, by the Managing Director or a Director thereof;

(ii) in any other case, by the principal officer thereof;

(b) in the case of a Mutual Fund, by the trustee or such other person managing the affairs of the Mutual Fund as may be duly authorised by the trustee in this behalf.

S.9 Time limit to be specified in the notice calling for return of taxable securities transaction.

Where an assessee fails to furnish the return under sub-section (1) of section 101 of the Act within the time specified in sub-rule (4) of rule 7, the Assessing Officer may issue a notice to such person requiring him to furnish, within thirty days from the date of service of the notice, a return in the Form prescribed in rule 7 as applicable to him and verified in the manner indicated therein.

S.10 Notice of demand.

Where any tax, interest or penalty is payable in consequence of any order passed under the provisions of Chapter VII of the Act, the Assessing Officer shall serve upon the assessee a notice of demand in Form No. 3 specifying the sum so payable.

S.11 Prescribed time for refund of tax to the person from whom such amount was collected.

Every assessee, in case any amount is refunded to it on assessment under sub-section (2) of section 102 of the Act, shall, within thirty days from the date of receipt of such amount, refund the same to the concerned person from whom it was collected.

S.12 Form of appeal to Commissioner of Income-tax (Appeals).

(1) An appeal under sub-section (1) of section 110 to the Commissioner (Appeals) shall be made in Form No. 4.

(2) The form of appeal prescribed by sub-rule (1), the grounds of appeal and the form of verification appended thereto relating to an assessee shall be signed and verified by the person who is authorised to sign the return of taxable securities transactions under rule 8, as applicable to the assessee.

S.13 Form of appeal to Appellate Tribunal.

An appeal under sub-section (1) or sub-section (2) of section 111 of the Act to the Appellate Tribunal shall be made in Form No. 5, and where the appeal is made by the assessee, the form of appeal, the grounds of appeal and the form of verification appended thereto shall be signed by the person specified in rule 8.