Part of a series on
Taxation
An aspect of fiscal policy
Policies Government revenue Property tax equalization Tax revenue Non-tax revenue Tax law Tax bracket Flat tax Tax threshold Exemption Credit Deduction Tax shift Tax cut Tax holiday Tax amnesty Tax advantage Tax incentive Tax reform Tax harmonization Tax competition Tax withholding Double taxation Representation Unions Medical savings account
Economics General Theory Price effect Excess burden Tax incidence Laffer curve Optimal tax Theories Optimal capital income taxation Distribution of Tax Tax rate Flat Progressive Regressive Proportional
Collection Revenue service Revenue stamp Tax assessment Taxable income Tax lien Tax refund Tax shield Tax residence Tax preparation Tax investigation Tax shelter Tax collector Private tax collection Tax farming
Noncompliance General Tax avoidance Repatriation tax avoidance Tax evasion Tax resistance Tax shelter Debtors' prison Smuggling Black market Unreported employment Corporate Tax inversion Transfer mispricing Base erosion and profit shifting (BEPS) Double Irish Dutch Sandwich Single Malt CAIA Locations Tax havens Corporate havens Offshore financial centres (OFCs) Offshore magic circle Conduit and sink OFCs Financial centres Financial Secrecy Index Major examples Ireland as a tax haven Ireland v. Commission Leprechaun economics Liechtenstein tax affair Luxembourg Leaks Offshore Leaks Paradise Papers Panama Papers Swiss Leaks United States as a tax haven Panama as a tax haven
Types Direct Indirect Per unit Ad valorem Aviation Airport improvement Landing Solidarity Capital gains Expatriation Consumption Departure Hotel Sales Stamp Television Tourist Value-added Dividend Environmental tax Carbon Landfill Natural resources consumption Severance Steering Stumpage Excise Alcohol Cigarette Fat Meat Sin Sugary drink Tobacco General Georgist Gift Gross receipts Hypothecated Income Inheritance (estate) Land value Luxury Payroll Pigouvian Property Single Surtax Turnover Use User charge/fee Congestion Fuel Road/GNSS Toll Vehicle miles traveled Corporate profit Excess profits Windfall Negative (income) Wealth
International Financial transaction tax Currency transaction tax European Union Common Consolidated Corporate Tax Base (CCCTB) Global minimum corporate tax rate Tobin tax Spahn tax Tax equalization Tax treaty Exchange of Information Permanent establishment Transfer pricing European Union FTT Foreign revenue rule
Trade Custom Duty Tariff Import Export Tariff war Free trade Free-trade zone Trade agreement ATA Carnet
Research Academic Mihir A. Desai Dhammika Dharmapala James R. Hines Jr. Ronen Palan Joel Slemrod Gabriel Zucman Advocacy groups Institute on Taxation and Economic Policy (ITEP) Oxfam (UK) Tax Foundation (US) Tax Justice Network (TJN) Tax Policy Center (US)
Religious Church tax Eight per thousand Teind Tithe Fiscus Judaicus Leibzoll Temple tax Tolerance tax Jizya Kharaj Khums Nisab Zakat
By country All Countries List of countries by tax rates Tax revenue to GDP ratio Tax rates in Europe Individual Countries Albania Algeria Argentina Armenia Australia Azerbaijan Bangladesh Bhutan Brazil Bulgaria BVI Canada China Colombia Croatia Denmark Finland France Germany Greece Hong Kong Iceland India Indonesia Iran Ireland Israel Italy Japan Kazakhstan Lithuania Malta Morocco Namibia Netherlands New Zealand Norway Pakistan Palestine Peru Philippines Poland Portugal Russia South Africa Sri Lanka Sweden Switzerland Taiwan Tanzania United Arab Emirates United Kingdom United States Uruguay
Business portal  Money portal
v t e

Securities Transaction Tax (STT) is a tax payable in India on the value of securities (excluding commodities and currency) transacted through a recognized stock exchange. As of 2016, it is 0.1% for delivery based equity trading.^[1]

STT does not apply to off-market transactions or on commodity or currency transactions.^[2] The original tax rate was set at 0.125% for a delivery-based equity transaction and 0.025% on an intra-day transaction.^[3] The rate was set at 0.017% on all Futures and Options transactions.

STT was originally introduced in 2004 by the then Finance Minister, P. Chidambaram to stop tax avoidance of capital gains tax. The government reduced this tax in the 2013 budget after protests for years by the brokers and the trading community. The revised STT for delivery-based equity trading is 0.1% on the turnover. For Futures, the tax has been reduced to 0.01% on the sell-side only. For Equity Options, the STT has been reduced to 0.05% on the sell side of the premium amount. The rest of the tax structure remains as is.^[4] STT is a direct tax.^[5]

The Government announced on 24 March 2023, that STT will increase by 25% effective 01 April 2023. STT on Futures (sell side) will be 0.0125% from the current 0.01% and STT on Options(Sell side) will be 0.0625% from 0.05%.^[6]

The STT is levied and collected by the union government of India.^[7] STT can be paid by the seller or the purchaser depending on the transaction. The Securities Contract (Regulation) Act, 1956 defines Securities the transaction of which are taxable under STT.^[8][9]

Scope of STT

According to the Securities Contracts (Regulation) Act, 1956, STT would be applicable on following securities:^[10]

• Shares, bonds, debentures, debenture stock or other marketable securities of a like nature in or of any incorporated company or other body corporate
• Derivatives
• Units or any other instrument issued by any collective investment scheme to the investors in such schemes
• Security receipt as defined in section 2(zg) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002
• Government securities of equity nature
• Rights or interest in securities
• Equity-oriented mutual funds

STT is not applicable for any off-market transaction.^[11]

STT Computation

As per the Finance Act 2004, and modified by Finance Act 2008 (18 of 2008) STT on the transactions executed on the Exchange shall be as under:

Note that Service Tax, Surcharge and Education Cess are not applicable on STT.

• Value of taxable securities transaction relating to an "option in securities" shall be the option premium, in case of sale of an option in securities.
• Value of taxable securities transaction relating to an "option in securities" shall be the settlement price less the strike price,^[13] in case of sale of an option in securities, where option is exercised.

Income Tax and STT

Taxation of profit or loss from securities transactions depends on whether the activity of purchasing and selling of shares / derivatives is classified as investment activity or business activity.

Treatment of STT also depends upon whether the income from these securities transactions are included under the head “Income from Capital Gains” or under the head ‘Profits and Gains of Business or Profession’.

Scenario 1: Income from Capital Gains

This refers to the scenario where the assessee is either Salaried or is engaged in some other business or profession and trading in securities is not the main line of business. In such cases gains or losses from securities transactions are taxed under the head “Income from Capital Gains”.

Gains or losses are subject to Short Term Capital Gains (STCG) or Long Term Capital Gains (LTCG) tax depending upon the period of holding, i.e., if the holding period is less than Or equal to 12 months, gains are classified as STCG and if the holding period is more than 12 months, gains are classified as LTCG. Any equity share, which has been sold through a recognized stock exchange and on which STT has been paid and if it comes under LTCG, it'll be taxed at 10% whereas in case of STCG of such shares, the gains shall be taxed only at 15%, plus surcharge and education cess under section 111A of the Act.

Scenario 2: Profits and Gains of Business or Profession

This refers to the scenario where main business of the assessee is trading in securities. In such cases the gains or losses are classified as business income, which is taxed at the regular rate of income-tax.

STT paid in respect of taxable securities transactions entered into in the course of business shall be allowed as deduction under section 36 of the Income-tax Act. Until 31 March 2008, the amount of STT paid was allowed as rebate under section 88E of the Income-tax Act. However, with effect from 1 April 2008, rebate available under section 88E has been discontinued.