STT Calculator

Securities Transaction Tax — What It Is and Who Pays It

Securities Transaction Tax (STT) is a tax levied on every transaction in securities traded on Indian stock exchanges — NSE, BSE, and recognised derivatives exchanges. It's not a capital gains tax. It's a transaction tax, collected at source by the exchange and deposited with the government. You never file it separately — your broker deducts it and shows it in your contract note.

STT was introduced in the Finance Act 2004 to curb tax evasion on capital market transactions. Before STT, many investors underreported capital gains. STT made it harder to hide market activity because every transaction is captured at the exchange level. As a trade-off, when STT is paid, you get the concessional LTCG rate of 12.5% and STCG rate of 20% on equity. Securities without STT don't get these rates.

STT Rates by Segment (Current as of FY 2024-25)

How STT Impacts Your Returns

At 0.1% on both buy and sell for delivery trades, STT costs 0.2% round-trip. On a ₹1,00,000 equity trade, that's ₹200 in STT alone — before brokerage, GST, or SEBI charges. For a trader doing ₹10 lakh in monthly delivery volume, STT alone runs to ₹2,000 a month or ₹24,000 a year. It's not negligible.

For intraday traders, the STT burden is lighter — 0.025% only on the sell side. But intraday volumes are typically much higher, so the absolute rupee impact can still be significant. An intraday trader with ₹50 lakh daily turnover pays ₹1,250 in STT per day, ₹25,000 per month assuming 20 trading days.

Options traders pay STT on the premium received when selling options and on settlement value when exercising. With the shift to Cash-Settled Options across most index contracts, the settlement-based STT at 0.125% can be substantial on deep ITM options at expiry.

STT as a Business Expense for Traders

For traders classified as running a business (typically F&O traders and active intraday traders), STT paid can be claimed as a business expense while computing income. This is different from investors, where STT is not deductible — it's simply a cost of acquiring or disposing of securities.

The distinction matters: if you're a retail investor holding equity for capital gains, STT is a sunk cost. If you're an F&O trader filing as business income, you can deduct STT paid from your gross trading profits before arriving at taxable business income. This effectively reduces your tax liability by STT × your marginal rate.

Budget 2024 increased STT on F&O significantly — options sell-side STT went from 0.0625% to 0.1%, and futures sell-side STT from 0.0125% to 0.02%. These hikes were explicitly aimed at curbing excessive retail speculation in derivatives after SEBI data showed over 90% of individual F&O traders were losing money.

STT on Mutual Funds and ETFs

For equity mutual funds, STT is levied only on the sell side at 0.001% of the redemption value. On a ₹5 lakh SIP corpus redeemed after 3 years, STT would be ₹5 — practically negligible. This is by design: SEBI and the government want to encourage long-term MF investing, so the STT burden on MFs is kept minimal.

ETFs trade on exchange like stocks, so delivery-based STT rates apply: 0.1% on buy and 0.1% on sell. Gold ETFs, international ETFs, and debt ETFs all follow the same equity delivery STT structure since they transact on NSE/BSE.