New Delhi, Oct. 28 -- When an Indian investor buys shares, the government collects tax. When the investor sells them, it collects tax again. And if there is a profit, a third tax awaits.

Consider a Rs.1 lakh investment sold for the same amount. No gain, no loss. Yet, the investor pays Rs.200 in securities transaction tax (STT), Rs.15 in stamp duty and about Rs.7.50 in other charges and goods and services tax (GST)-a loss of Rs.223 before brokerage and depository charges. The stock hasn't fallen. The investor has still lost money.

Introduced in 2004, STT came alongside the abolition of long-term capital gains tax on listed equities. The bargain was simple: tax transactions, not long-term gains. But long-term capital gains tax returned in...