What is STT – Securities Transaction Tax?

STT or Securities Transaction Tax is a tax payable by Investors & Traders to the Central Government and therefore is categorised as a Regulatory Charge.

Introduced in 2004-05, STT has helped simplify taxation on investing & trading in Capital markets in India & for investors, made it tax efficient as well.

It is pertinent to note that STT will be collected by the broker at the time is transaction is conducted by you. STT is applied on the value of transactions and charged to traders/investors in the contract notes issued to them by their Broker.

How is STT charged?

For Cash Market (EQ) Transactions:

  • STT on Intraday Trades: STT is charged on the sell side of the Transaction at 0.025%. Let us explain with an example:

Trader buys 100 shares of HDFC at Rs.1000 each at 9:30 AM on Monday & sells them off at Rs.1005 at 3:15 PM.  STT will be Rs.25.13 calculated as Rs.1005*100*0.025%=Rs.25.13

  • STT on Delivery and BTST Trades: STT is charged on both legs, i.e. Buy & Sell side of the transaction. Let us explain with an example:

Trader buys 100 shares of HDFC at Rs.1000 each on 1 April 2016 & sells the same at Rs.1010 on 3 April 2016. STT will be Rs.100 on the Buy side calculated at 0.1% on Rs.1000*100*0.1%=Rs.100 & Rs.101 on the Sell side calculate at 0.1% on Rs.1010*100*0.1%=Rs.101, with the total STT coming to Rs.201.

An important benefit of the STT is that, in case STT is paid on transactions, capital gains on securities transactions get charged at a preferential rate. In case of short term capital gains, a tax of 15% is applicable and in case of long term capital gains, the tax rate is 0% i.e. long terms capital gains is exempt from tax for transactions where STT is paid.

For Future & Option Market Transactions:

  • STT on Futures transactions: STT will be charged on the sell side turnover of the transaction, regardless of whether the trade is Intraday or Positional. The current rate is 0.01%. Let us explain with an example.

Trader sells 1 lot of NIFTY on 1 August at 8600. His total volume comes to Rs.8600*75=Rs.6,45,000. On the same he has to pay Rs.64.50 as STT calculated as 0.01%*Rs.6,45,000. Now regardless of whether he squares off his position on 1 August 2016, or keeps it till expiry, he will not need to pay any STT on the buy leg of the transaction.

  • STT on Options Trades:
    • On Selling Options: Similar to futures, STT is payable only on the premium value on the sell side of the transaction. Let us explain with an example:

Trader sells 1 lot of Calls on the NIFTY at Strike Price 8600 for Rs.200 each. Hence STT charged will be Rs.7.50 calculated as 75 (Lot size of NIFTY)*Rs.200*0.05%.

You can calculate all the Transaction Charges including Brokerage, STT among others for your trade on our Brokerage Calculator.

Check out the Charge List to know more about all the charges applicable while trading in the Indian stock markets.

The same way STT is applicable for trading in securities, CTT or Commodity Transaction Tax is applicable for trading in non-agri commodity derivatives.

What is STT Securties Transacation Charges

3 Comments

  1. Viresh

    I have traded share with intraday upto 1 crore rs in a year is there any limitations for individuals?

  2. Santosh

    Excellent article in very simple language. From long time I was searching how to enter in stock market as a beginner. Now I can easily go with this helpful article .
    Thanks a lot,

  3. Vijay

    Hi its good blog, I have 1 question. My gain out of my share is considered as income and how much the tax has to be paid for that. Say I got 1000 out of my shares by selling how much the income tax has to be paid

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