Securities Transaction Tax
Also called: STT · Topic: Taxation: Direct and Indirect Taxes, GST and Global Tax Issues · NCERT: Beyond NCERT
Meaning
Securities Transaction Tax (STT) is a tax on the value of securities bought and sold on recognised stock exchanges, including derivatives (futures and options, called F&O). It was introduced in 2004. It is collected on every trade, whether the trade makes a profit or a loss, so it is simple to collect and hard to evade. It is a direct tax, even though it is charged on transactions. F&O rates were raised in 2024. Budget 2026-27 raised them again: futures from 0.02% to 0.05% and options from 0.1% to 0.15% (verify current).
Example
A trader sells futures worth ₹10 lakh. At 0.05%, the STT is ₹500, even if the trade made a loss.
Don't confuse with
- Capital gains tax: charged only on the profit from selling an asset, not on the value of each trade.
- Commodities Transaction Tax (CTT, 2013): a similar tax, but on commodity-exchange trades rather than securities.
Related concepts
- Income tax
- Corporate tax
- Minimum Alternate Tax
- Capital gains tax
- Angel tax
- Wealth tax and inheritance tax
- Paper taxes
- Tax deducted at source
- Faceless assessment