Share Tax and STT
This query is : Resolved
16 January 2011
Hi, I'm a salaried guy but do little bit share trading. I want to know What is Tax structure in (a)Shares, (b) Mutual Fund, (c) ETF , (d) Commodity in Spot Exchange......as some deduct STT some don't while doing trade.
In addition to above...how STT benefits are availed...
In addition to above...how STT benefits are availed...
17 January 2011
Prashant,
Looking towards your anxiety, I am trying to reply , even though many parts of the query may not be addressed by me-
*
If you will check the contract note you will come to know about ST, STT, Turnover Tax, and Stamp Duty etc.
*
All these taxes can be claimed as Expenses if you are engaged in share trading activities against the profit (which seldom arises, all are in loss today) and it's taxed as per normal business profit.
*
In case of Mutual Funds, you earn capital gain on your investment. Taxability of which depends upon the period of holding and type of fund.
*
STT is deducted when you sale shares.
But when you purchase shares it is added.
*
STT benefits availment has become a thing of past.
*
Would you like to Intra Day Trading Also?
because it has been left in your query?
Prashant,
Looking towards your anxiety, I am trying to reply , even though many parts of the query may not be addressed by me-
*
If you will check the contract note you will come to know about ST, STT, Turnover Tax, and Stamp Duty etc.
*
All these taxes can be claimed as Expenses if you are engaged in share trading activities against the profit (which seldom arises, all are in loss today) and it's taxed as per normal business profit.
*
In case of Mutual Funds, you earn capital gain on your investment. Taxability of which depends upon the period of holding and type of fund.
*
STT is deducted when you sale shares.
But when you purchase shares it is added.
*
STT benefits availment has become a thing of past.
*
Would you like to Intra Day Trading Also?
because it has been left in your query?
19 January 2011
Thanks for replying Mr. Bafna, sometimes I do Intra Day Trading but mostly I am into delivery based trading. So, is there any difference in the pft/loss set-off among these two? Also why STT benefit is past thing?
Also, in ETF i see some ETF listed in NSE, how this will be treated...just like shares or like mutual fund? b'coz when I purchased it ...no STT was there in bill.
Further, in NSE more than 1 yr means long term and 15% Tax...whereas what about in Mutual fund and ETF...what the time period and whats the tax rate?
Furthermore, I recently was reading about National Spot Exchange....for Bullion trading...I'd be obliged if you can tell me abt its Tax structure also.
Also, in ETF i see some ETF listed in NSE, how this will be treated...just like shares or like mutual fund? b'coz when I purchased it ...no STT was there in bill.
Further, in NSE more than 1 yr means long term and 15% Tax...whereas what about in Mutual fund and ETF...what the time period and whats the tax rate?
Furthermore, I recently was reading about National Spot Exchange....for Bullion trading...I'd be obliged if you can tell me abt its Tax structure also.
25 July 2025
Your questions cover multiple aspects of tax treatment and STT (Securities Transaction Tax) across various financial instruments. Let me address each part in a clear, categorized format for you.
✅ 1. Shares (Equity)
(a) Delivery-Based Trading (Investing)
STT Applicable: Yes (on both buying and selling)
Tax Treatment:
Short Term Capital Gain (STCG): If sold within 12 months, taxed @ 15%
Long Term Capital Gain (LTCG): If held for >12 months, first ₹1 lakh is exempt, rest taxed @ 10% (without indexation)
STT Benefit: Required to be paid to claim concessional tax rates on capital gains.
(b) Intra-Day Trading
STT Applicable: Yes (only on selling)
Tax Treatment: Considered as speculative business income
Taxed as per slab rates
Loss can be set off only against speculative profits (not capital gains or salary)
Carried forward for 4 years if not set off
✅ 2. Mutual Funds
(a) Equity-Oriented Mutual Funds (≥65% equity exposure)
STT Applicable: Yes (only on sale/redemption)
STCG: 12 months → First ₹1 lakh exempt, excess taxed @ 10%
(b) Debt Mutual Funds (as per latest rules from April 1, 2023)
No STT
All gains now taxed as short-term capital gains, i.e., slab rates, regardless of holding period
Indexation benefit removed
✅ 3. ETFs (Exchange-Traded Funds)
Equity ETFs:
Treated like shares
STT applies on sale
Tax Treatment: Same as equity shares (15% STCG, 10% LTCG > ₹1L)
Debt or Gold ETFs:
No STT
Taxed as capital gains:
Short-term (held 3 years) → 20% with indexation
Note: From FY 2023–24 onwards, debt/gold ETFs also follow new mutual fund taxation (slab rate only), if acquired after April 1, 2023.
✅ 4. Commodities on National Spot Exchange (NSEL)
No STT
Tax Treatment:
Profits or Losses from spot commodity transactions = Business income (non-speculative)
Taxed as per slab rates
Can claim expenses (brokerage, charges, etc.)
Losses can be set off against other business income (but not salary)
✅ 1. Shares (Equity)
(a) Delivery-Based Trading (Investing)
STT Applicable: Yes (on both buying and selling)
Tax Treatment:
Short Term Capital Gain (STCG): If sold within 12 months, taxed @ 15%
Long Term Capital Gain (LTCG): If held for >12 months, first ₹1 lakh is exempt, rest taxed @ 10% (without indexation)
STT Benefit: Required to be paid to claim concessional tax rates on capital gains.
(b) Intra-Day Trading
STT Applicable: Yes (only on selling)
Tax Treatment: Considered as speculative business income
Taxed as per slab rates
Loss can be set off only against speculative profits (not capital gains or salary)
Carried forward for 4 years if not set off
✅ 2. Mutual Funds
(a) Equity-Oriented Mutual Funds (≥65% equity exposure)
STT Applicable: Yes (only on sale/redemption)
STCG: 12 months → First ₹1 lakh exempt, excess taxed @ 10%
(b) Debt Mutual Funds (as per latest rules from April 1, 2023)
No STT
All gains now taxed as short-term capital gains, i.e., slab rates, regardless of holding period
Indexation benefit removed
✅ 3. ETFs (Exchange-Traded Funds)
Equity ETFs:
Treated like shares
STT applies on sale
Tax Treatment: Same as equity shares (15% STCG, 10% LTCG > ₹1L)
Debt or Gold ETFs:
No STT
Taxed as capital gains:
Short-term (held 3 years) → 20% with indexation
Note: From FY 2023–24 onwards, debt/gold ETFs also follow new mutual fund taxation (slab rate only), if acquired after April 1, 2023.
✅ 4. Commodities on National Spot Exchange (NSEL)
No STT
Tax Treatment:
Profits or Losses from spot commodity transactions = Business income (non-speculative)
Taxed as per slab rates
Can claim expenses (brokerage, charges, etc.)
Losses can be set off against other business income (but not salary)
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