{"id":5219,"date":"2026-08-26T09:18:11","date_gmt":"2026-08-26T09:18:11","guid":{"rendered":"https:\/\/jumpp.finance\/blog\/?p=5219"},"modified":"2026-08-26T09:18:12","modified_gmt":"2026-08-26T09:18:12","slug":"securities-transaction-tax","status":"publish","type":"post","link":"https:\/\/jumpp.finance\/blog\/financial-management\/personal-finance\/securities-transaction-tax\/","title":{"rendered":"What Is Securities Transaction Tax (STT) and How Does It Work?"},"content":{"rendered":"
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When you buy or sell securities, brokerage is not the only cost you may see on your contract note. One of the statutory charges that can apply is Securities Transaction Tax (STT)<\/strong>.<\/p>\n\n\n\n

STT is charged on specified securities transactions in India, and the rate depends on what you trade and whether you are buying or selling. Here is how it works, how it is calculated and the latest applicable rates.<\/p>\n\n\n\n

<\/span>What is STT?<\/span><\/h2>\n\n\n\n

Securities Transaction Tax (STT) is a tax charged on specified transactions involving securities through recognised stock exchanges in India.<\/strong><\/p>\n\n\n\n

It was introduced in 2004 and is collected as part of the transaction itself. Depending on the type of trade, STT may be payable by the buyer, seller or both.<\/p>\n\n\n\n

<\/span>How Does STT Work?<\/span><\/h2>\n\n\n\n

STT is calculated automatically when an eligible transaction is executed. You do not need to calculate or pay it separately to the government.<\/strong><\/p>\n\n\n\n

The process generally works like this:<\/p>\n\n\n\n

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  1. You place a buy or sell order.<\/li>\n\n\n\n
  2. The trade is executed on the exchange.<\/li>\n\n\n\n
  3. The applicable STT rate is applied.<\/li>\n\n\n\n
  4. The charge appears in your contract note or transaction statement.<\/li>\n\n\n\n
  5. The collected amount is deposited as required under the tax framework.<\/li>\n<\/ol>\n\n\n\n

    The person who pays STT depends on the type of transaction.<\/p>\n\n\n\n

    <\/span>How is STT Calculated?<\/span><\/h2>\n\n\n\n

    STT is calculated by applying the prescribed STT rate to the taxable value of the transaction. The calculation basis can differ across equity, futures and options.<\/strong><\/p>\n\n\n\n

    A simple formula is<\/p>\n\n\n\n

    STT = Taxable Transaction Value \u00d7 Applicable STT Rate<\/strong><\/p>\n\n\n\n

    For example, suppose you sell equity shares worth \u20b950,000<\/strong> in a delivery-based transaction.<\/p>\n\n\n\n

    Applicable STT rate = 0.1%<\/strong><\/p>\n\n\n\n

    STT = \u20b950,000 \u00d7 0.1% = \u20b950<\/strong><\/p>\n\n\n\n

    The actual taxable value used may depend on the specific transaction and segment.<\/p>\n\n\n\n

    <\/span>What Are the STT Charges Across Different Market Segments?<\/span><\/h2>\n\n\n\n

    STT rates vary depending on whether you trade equity delivery, intraday equity, futures, options or equity-oriented mutual funds.<\/strong><\/p>\n\n\n\n

    The latest rates applicable from 1 April 2026<\/strong> are:<\/p>\n\n\n\n

    STT Rates in India<\/h3>\n\n\n\n
    Transaction<\/strong><\/td>STT Rate<\/strong><\/td>Who Pays?<\/strong><\/td><\/tr>
    Equity delivery \u2013 Buy<\/td>0.1%<\/td>Buyer<\/td><\/tr>
    Equity delivery \u2013 Sell<\/td>0.1%<\/td>Seller<\/td><\/tr>
    Equity intraday \u2013 Sell<\/td>0.025%<\/td>Seller<\/td><\/tr>
    Equity futures \u2013 Sell<\/td>0.05%<\/td>Seller<\/td><\/tr>
    Equity options \u2013 Sell<\/td>0.15% on option premium<\/td>Seller<\/td><\/tr>
    Exercised equity options<\/td>0.15% on intrinsic value<\/td>Buyer<\/td><\/tr>
    Equity-oriented mutual funds \u2013 Purchase<\/td>Nil<\/td>Not applicable<\/td><\/tr>
    Equity-oriented mutual funds \u2013 Delivery sale<\/td>0.001%<\/td>Seller<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

    <\/p>\n\n\n\n

    The 2026 Budget increased STT on futures from 0.02% to 0.05%<\/strong>, options premium from 0.10% to 0.15%<\/strong>, and exercised options from 0.125% to 0.15%<\/strong>, effective 1 April 2026.<\/p>\n\n\n\n

    STT Charges on Equity Delivery<\/h3>\n\n\n\n

    For delivery-based equity transactions, STT is charged at 0.1% on both the purchase and sale value.<\/strong><\/p>\n\n\n\n

    This means:<\/p>\n\n\n\n