Union Budget 2025: Abolish STT to reduce tax burden on stock market investors, PHD Chamber urges FM Sitharaman

Union Budget 2025: Abolish STT to reduce tax burden on stock market investors, PHD Chamber urges FM Sitharaman

At a pre-Budget consultation meeting with Finance Minister Nirmala Sitharaman and other officials, the representatives of PHD Chamber of Commerce & Industry (PHDCCI) suggested a few key measures, including abolishment of Securities Transaction Tax (STT).

On December 30, PHDCCI suggested that with the recent increase in long-term capital gains tax on listed shares from 10% to 12.5%, the long-term capital gains tax on shares is now on par with other assets and thus, STT should be abolished.

STT of Rs 40,114 crore was collected between April 1-December 17 of current fiscal year.

"This move would reduce the tax burden on investors and encourage more investment in the stock market, thereby stimulating economic growth," said the industry body.

Earlier on December 30, Ministry of Finance said on X platform, "Union Minister for Finance and Corporate Affairs Smt. budget@nsitharaman chairs the fifth Pre-Budget Consultation with industry representatives in connection with the forthcoming Union Budget 2025-26, in New Delhi, today."

The other suggested measures are:

* Reduce tax rates for individuals and Limited Liability Partnership (LLP) firms to 25%
* Increase capital expenditure to over Rs 13 lakh crore in 2025-26 from Rs 11.11 lakh crore in the current fiscal
* Expand PLI scheme beyond the 14 sectors to medicinal plants, handicrafts, leather and footwear, gems and jewellery, and the space sectors.

Key suggestions from ASSOCHAM in pre-Budget meeting:

* Mandate banks to periodically disclose the number and amount of collateral-free loans granted to MSMEs

* Provide an additional allocation or net to enhance credit flow to MSMEs, much like the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) launched during COVID

* Extend scope of presumptive taxation to MSMEs and new age businesses like data centres, data hosting, cloud computing

Key suggestions from FICCI in pre-Budget meeting:

* Increase capex in FY26 by 15 percent over the Rs 11.11 lakh core budgeted in 2024-25

* Rationalise multiple TDS/TCS rates by converging them into a simple two or three-tier rate structure

* Stop imposing TDS/TCS on transactions that are subject to GST since the relevant information is already available through GST filings

* FICCI recommends increasing health sector allocation to 2.5% of GDP by 2025

* Review Priority Sector Lending framework to include climate adaptation, climate risk mitigation activities such as EVs

As per ministry, the senior officials, including the Finance Secretary, the Secretary of the Department of Investment and Public Asset Management (DIPAM), and secretaries from the Department of Economic Affairs and the Department for Promotion of Industry and Internal Trade (DPIIT), were present at the meeting. Chief Economic Adviser to the Government of India also participated.

Last week, Sitharaman chaired the fourth Pre-Budget Consultation meeting with stakeholders and experts from the export, trade, and industry sectors in preparation for the Union Budget 2025-26.

Sitharaman has so far held a series of meetings with various stakeholders, including with MSMEs, farmers’ associations, and economists.

The 2025-26 Budget will mark Nirmala Sitharaman’s eighth budget.