STT Charges
What is STT Charges?
STT charges, or Securities Transaction Tax charges, represent the tax levied on securities transactions executed through recognized stock exchanges in India. Introduced to curb tax evasion and streamline the taxation system in the securities market, STT charges are applied to both the buyer and the seller in certain types of transactions.
Key Components of STT Charges
- Applicable Transactions:
- STT charges are applicable to transactions involving the purchase or sale of securities such as stocks, derivatives, and equity-oriented mutual funds on recognized stock exchanges in India.
- These transactions include both delivery-based trades and intraday trades in the equity segment.
- Rate Structure:
- STT charges are imposed at predetermined rates on the value of the securities transaction.
- The rates may vary based on the type of transaction, such as equity delivery, equity futures, equity options, and others.
How are STT Charges Calculated?
- For Equity Delivery: STT charges are typically levied as a percentage of the total transaction value for both the buyer and the seller. The rate is applied on the respective market values of the securities bought or sold.
- For Derivative Contracts: STT charges vary based on the type of derivative contract and the position (buy or sell). Different rates are applicable to equity futures, options on futures, and options on individual securities.
Example
Suppose an investor buys shares worth ₹100,000 in a delivery-based transaction on a recognized stock exchange in India. If the applicable STT rate for equity delivery is 0.1% for both buyer and seller, the STT charges would be calculated as follows:
Buyer's STT Charges = ₹100,000 * 0.001 = ₹100
Seller's STT Charges = ₹100,000 * 0.001 = ₹100
Therefore, the total STT charges for the transaction would be ₹100 (buyer) + ₹100 (seller) = ₹200.
