Securities Transaction Tax (STT) is a direct tax levied on every purchase and sale of securities that are listed on the recognized stock exchanges in India. STT is a kind of financial transaction tax which is similar to tax collected at source (TCS) . Different STT rates are applicable for Equity (cash) and Futures and Options (F&O) transactions. The rates are decided by the government and can be subject to change from time to time if needed. The STT charges for different types of trades are as follows:
- Intraday: 0.025% on the sell side.
- Delivery: 0.1% on both the buy and sell side.
- Options: 0.125% of the intrinsic value on options that are bought and exercised. 0.0625% of the premium for options that are shorted.
- Futures: 0.0125% on the sell side.
The STT is charged on both the buy and sell side for delivery trades, and the average price is calculated to determine the charge. The formula to calculate the average price is also provided in the same source.
