INTERVIEW QUESTIONS TAX SECURITIES TRANSACTION TAX DETAILS

Question: What is the rate of Securities Transaction Tax (STT)?

Answer: 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.

For example, assuming a trader buys 10 lots of Nifty Futures at Rs. 6000 and sells it at Rs. 6010. Since the lot size of Nifty is 50, a STT charge of

STT = 0.01% (STT rate) x 8700 (selling price) x 10 (lots) x 25 (lot size of Nifty)
= Rs. 217.50 would be levied on the transaction.

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.

For example, assuming a trader buys 10 lots of Nifty Futures at Rs. 6000 and sells it at Rs. 6010. Since the lot size of Nifty is 50, a STT charge of

STT = 0.01% (STT rate) x 8700 (selling price) x 10 (lots) x 25 (lot size of Nifty)
= Rs. 217.50 would be levied on the transaction. Source: CoolInterview.com

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