CBDT Releases Format, Procedure and Guidelines for submission of Forms for Securities Transaction Tax

The Central Board of Direct Taxes(CBDT) Vide Notification No. 2 of 2022 dated 24th June 2022 released Format, Procedure and Guidelines for submission of Forms for Securities Transaction Tax.

The Notification is Given Below:

According to Section 101 of the Securities Transaction Tax, every recognised stock exchange, every mutual fund, insurance company, or lead merchant banker in an initial public offering (IPO), or an initial offer, must prepare and deliver or cause to be delivered a return to the Assessing Officer or to any other authority or agency designated by the Board within the prescribed time following the end of each financial year.

The CBDT has published Notification No. 9/2022, dated January 18, 2022, for the purpose of electronic filing of Securities Transaction Tax returns. The announcement states that a new class of entity, the Insurance Company, is now in charge of collecting and disbursing the securities transaction tax. According to the aforementioned announcement, a new Form No. 2A has also been created for the Insurance Company to submit together with their Securities Transaction Tax return. The Director General of Income Tax (Systems) is given the authority to determine the processes, file types, and standards necessary to guarantee secure data capture and transfer under the new subrule 2A of rule 7.

All eligible reporting institutions having obligation to submit Securities Transaction Tax return are requested to submit the registration information as per Annexure A and send the signed copy in pdf format (size upto 1Mb) on ITD official email id at [email protected] .The guidelines for preparation and submission of Securities Transaction Tax Return have been mentioned in the STT Rules 2004 amended via notification 9 of 2022. The format of return (Form No. 1, Form No. 2 and Form No. 2A) to be submitted is given in Annexure B. The data structure rules are enclosed in Annexure C . Notification of 2004, Securities Transaction Tax, Rules dated 29.09.2004 may be referred for class of persons responsible for filing Form No. 1 and Form No.2. The new rule 5A inserted via Notification No. 9/2022 may be referred for class of persons responsible for filing Form No. 2A.

The Securities Transaction Tax (1st Amendment) Rules, 2022, dated January 18, 2022, further changed the definition of a reporting institution (class of person accountable) and required all reporting institutions to prepare the data file in the prescribed format from their internal system. The data files must be sent by reporting institutions via an SFTP server using their login information (To be communicated separately).

Forms No. 1, 2, and 2A must be signed, validated, and provided by the category of person responsible as described in the Securities Transaction Rules of 2004 and as further changed by the Securities Transaction Tax (1st Amendment), Rules of 2022, dated 18th January 2022. The Securities Transaction Tax return must be submitted on or by June 30, the day after the financial year in which the transaction was registered or recorded.

The Reporting Institution is required to document and implement appropriate information security policies and procedures with clearly defined roles and responsibilities to ensure security of submitted return. The reporting person/entity is also required to document and implement appropriate archival and retrieval policies and procedures with clearly defined roles and responsibilities to ensure that submitted return and related information are available promptly to the competent authorities.

This Notification shall come into effect from the date of issue.

For Official Notification Download PDF Given Below: