Securities Transaction Tax (STT) is a direct tax levied on stock market transactions at the time of execution. It is automatically collected by stock exchanges.
Introduced in 2004
Applied on buy/sell of securities
Paid regardless of profit or loss
| Transaction Type | STT Rate |
|---|---|
| Equity Delivery – Buy | 0.1% |
| Equity Delivery – Sell | 0.1% |
| Intraday – Sell only | 0.025% |
| Futures – Sell | 0.01% |
| Options – Sell (Premium) | 0.0625% |
Trade Executed → STT Calculated → Deducted by Exchange → Deposited to Govt
Not refundable
Allowed as expense for business income
Not deductible for capital gains
Cost analysis for traders
Intraday vs delivery comparison
Net profit calculation
| Issue | Resolution |
|---|---|
| STT confusion | Refer contract note |
| Profit mismatch | Include STT in cost |
| High charges | Shift to delivery trading |
Always calculate net returns
Avoid over-trading
Use broker calculators
STT is unavoidable but predictable. Knowing its structure helps investors choose the right trading style.
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