Stt

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

27 March 2016 Dear Experts
Plz let me know what is the security transaction tax and in which condition it is applicable & its %

Regard
Gaurav jain

Sathish M

Sathish M (Expert)
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28 March 2016 STT or Securities Transaction Tax is a kind of turnover tax where the investor has to pay a small tax on the total consideration paid or received in a share transaction.

STT was introduced in the Budget of 2004 and implemented in Oct 2004. The objective behind the levy is to mitigate tax evasion as the same is taxed at source. Stocks, futures, option, mutual funds and exchange traded funds come under the ambit of STT.

The STT applicable in the case of intraday transaction will be different from the one applicable in the case of delivery transaction. Likewise, the STT applicable in the case of buying a security will be different from the one applicable in the case of selling the security.

STT will be applicable in the case of transaction that takes place in the exchanges. For availing the exemption in the case of long-term capital gain, the asset under consideration has to be subjected to STT.

STT, or Securities Transaction Tax, is a tax levied on securities trades (not on commodities or currency trades). Different STT rates are applicable for Equity (cash) and Futures and Options (F&O) transactions. STT is levied on trades on the National Stock Exchange (NSE), Bombay Stock Exchange (BSE), and other recognized stock exchanges. For commodities, CTT (Commodities Transaction Tax) is levied.

Equity: If the trade is a equity delivery trade, than a tax of 0.1% on the turnover is levied on both the buy side and sell sides of each trade. However, if the trade is squared off (closed) within the same trading day, meaning it is a intra-day transaction, then the STT rate applicable is 0.025% on the sell-side trade(s) only.

For example, assuming a trader buys 500 shares of Reliance Stock at Rs. 800 and sells it at Rs. 810. Since he sold it within the same day, a STT charge of
STT = 0.025% (STT rate) x 810 (selling price) x 500 (shares)
= Rs. 101.25
would be levied on the transaction.

Futures and Options: The STT rate applicable for Equity and Index Futures trades is set at 0.01% on Futures sell side turnover. The STT rate applicable for Equity and Index trades is set at 0.01% on Futures sell side turnover.

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