Securities Transaction Tax (1st Amendment), Rules, 2022

The Central Board of Direct Taxes, through Notification 9/2022 dated 18/01/2022, has announced the Securities Transaction Tax (1st Amendment), Rules, 2022. This amendment specifies that the person responsible for collecting and paying securities transaction tax in the case of an insurance company shall be the managing director or a whole-time director, as authorized by the Board of Directors of such company.

Overview of the Securities Transaction Tax (1st Amendment), Rules, 2022

The amendment, detailed here, introduces provisions for collecting and paying the securities transaction tax in the context of insurance companies. Key changes include:

Insertion of new Rule 5A on ‘Person responsible for collection and payment of STT in the case of Insurance Company’.
Amendments to STT Rules 6, 7, and 8.
Introduction of new STT FORM 2A for insurance companies to file STT Return.

Details of New Rule 5A of Securities Transaction Tax

Rule 5 of Securities Transaction Tax specifies the responsible entities for collection and payment of securities transaction tax in the case of a Mutual Fund. However, the amended rules insert Rule 5A, which stipulates that the responsible person in an insurance company shall be the managing director or a whole-time director, as designated by the company’s Board of Directors.

Changes to Rule 6 of STT - Payment of Securities Transaction Tax

Rule 6 has been substituted by STT (1st Amendment) Rules, 2022. According to this, every recognized stock exchange, trustee of a Mutual Fund, or authorized person of an insurance company must collect and pay securities transaction tax under section 100 of the Act. The managing director or a whole-time director, authorized by the Board, is responsible for remitting the tax to the Central Government through authorized banks including the Reserve Bank of India or the State Bank of India. For further details on similar amendments, you can refer to the Companies Incorporation Amendment Rules, 2023.

Amendment in Rule 7 of STT

The amended Rule 7 specifies that the Principal Director-General of Income-tax (Systems) or Director-General of Income-tax (Systems) is responsible for the procedures, formats, and standards ensuring secure data capture and transmission. They are also responsible for implementing security and archival policies for forms such as Form No. 1, Form No. 2, and Form No. 2A. To explore historical context, you might consider reviewing the Income Tax 20th Amendment Rules, 2020.

Update in Rule 8 of STT Rules

Rule 8, which addresses the signing of returns, now includes sub-rule 8(c), stating: “In the case of an insurance company, a duly authorized managing or whole-time director, as defined in clauses (54) and (94) of section 2 of the Companies Act, 2013, must sign.” Access more regarding corporate procedural compliance at Companies Management and Administration Amendment Rules, 2022.

FORM No. 2A

The CBDT has issued Form No. 2A for the filing of taxable securities transactions by an insurance company. The form requires details such as:

Name of the Insurance Company
Date of Registration/Incorporation under the Companies Act, 2013
PAN (Permanent Account Number)
Number of equity-oriented funds
Value of taxable securities transactions
Total securities transaction tax collectible/collected/paid
Securities transaction tax payable/refundable
Interest payable under section 104/ Interest paid
Details of Equity-Oriented Funds concerning ULIP
Details of securities transaction tax

You can learn more about securities transaction tax provisions at the main Securities Transaction Tax page or review similar amendments in documentation such as the Companies Prospectus and Allotment of Securities Amendment Rules, 2022.

Back to Learn

Frequently Asked Questions

Common questions about Securities Transaction Tax Amendment Rules.

The Securities Transaction Tax (1st Amendment) Rules, 2022 specify that the managing director or a whole-time director, as authorized by the Board of Directors of the insurance company, shall be responsible for collecting and paying the Securities Transaction Tax.

The new Rule 5A, introduced by the Securities Transaction Tax (1st Amendment) Rules, 2022, specifically clarifies the person responsible for collecting and paying Securities Transaction Tax in the case of insurance companies. This amendment aims to provide clarity and streamline the process for insurance companies.

According to the amended Rule 6, the managing director or a whole-time director authorized by the Board of Directors of an insurance company will pay the amount of Securities Transaction Tax to the credit of the Central Government by remitting it into any branch of the Reserve Bank of India, the State Bank of India, or any authorized bank, accompanied by a Securities Transaction Tax challan.

The amendment in Rule 7 empowers the Principal Director-General of Income-tax (Systems) or Director-General of Income-tax (Systems) to specify the procedures, formats, and standards for ensuring secure capture and transmission of data related to Securities Transaction Tax returns. This amendment aims to enhance data security and streamline the filing process.

The amendment in Rule 8 introduces a new sub-rule 8(c), which specifies that in the case of an insurance company, the return of Taxable Securities Transactions shall be signed by the managing director or a whole-time director, as defined in the Companies Act, 2013, duly authorized by the Board of Directors of the company.

The Central Board of Direct Taxes (CBDT) has introduced Form No. 2A specifically for insurance companies to file their returns of Taxable Securities Transactions. This form requires insurance companies to provide details such as their name, registration details, Permanent Account Number (PAN), value of taxable securities transactions, Securities Transaction Tax collected or paid, and details of equity-oriented funds related to Unit-Linked Insurance Plans (ULIPs).

The amendment in the Securities Transaction Tax Rules does not directly affect mutual funds. The existing Rule 5, which specifies the person responsible for collecting and paying Securities Transaction Tax in the case of mutual funds, remains unchanged.

In Form No. 2A, insurance companies need to provide their name, date of registration/incorporation under the Companies Act, 2013, Permanent Account Number (PAN), number and value of equity-oriented funds, value of taxable securities transactions, total Securities Transaction Tax collectible/collected/paid, Securities Transaction Tax payable or refundable, interest payable or paid under section 104, and details of equity-oriented funds concerning Unit-Linked Insurance Plans (ULIPs).

The amendment does not directly affect recognized stock exchanges. The existing provisions related to the collection and payment of Securities Transaction Tax by recognized stock exchanges remain unchanged.

The Principal Director-General of Income-tax (Systems) or Director-General of Income-tax (Systems) specifying procedures, formats, and standards under the amended Rule 7 aims to ensure secure capture and transmission of data related to Securities Transaction Tax returns. This measure is intended to enhance data security, archival, and retrieval policies for filing the relevant returns (Form No. 1, Form No. 2, and Form No. 2A).