The full form of STT is Securities Transaction Tax. A transaction tax applies to mutual funds and equities (not on commodities or currency trades). STT applies to trades conducted on the National Stock Exchange (NSE), the Bombay Stock Exchange (BSE), and other recognized stock exchanges.
It is a direct tax levied by the Government of India. It is based on the following parameters:
Securities Section (Equity, Futures & Option, Mutual Funds, etc.)
Transaction involving Purchase or Sale of security.
The type of trade (Intraday vs Delivery)
Intraday trading is subject to a 0.025 % Securities Transaction Tax only on the sell side of the trade.
Delivery is subject to 0.10% STT on both the buy and sell sides of the trade.
0.01 % Security Transaction Tax is levied on Equity Futures which will be calculated on the entire sale value of the contract.
For intraday and positional futures trading, the STT fee remains the same.
The Security Transaction Tax rate on Equity Options will be charged at a rate of 0.05 % on the sell value of the transaction.
The STT Rate for options stays unchanged for intraday and positional trading.
STT applicable on equity-based Mutual Funds is calculated based on the proportion of the unit price of 0.001% on the sale side of the transaction.
The Commodity Transaction Tax (CTT) is levied on commodity trade. It's a tax similar to STT that's imposed on commodity futures and options contracts when they're bought and sold. The CTT tax was enacted in July 2013 and applies only to non-agricultural commodities such as gold, silver, copper, and crude oil.
0.01 % Commodity Transaction Tax Rate on Futures will be applied to the total sale value of the contract.
The CTT Rate is the same for intraday and positional trading.
0.05 % Commodity Transaction Tax Rate on Options will be applied to the total sale value of the trade. The CTT Rate is the same for intraday and positional trading.
The fundamental distinction between STT and CTT is that STT applies to stocks, derivatives, and mutual funds, whereas CTT solely applies to commodities derivatives. Furthermore, CTT applies solely to the sell side of the trade, whereas STT might be applied to the buy side in some circumstances.
As explained above, STT and CTT are levied by the Government of India for generating revenue for regulating security and the commodity market. When you trade or invest in the market it is very important to consider the taxes before calculating your net profit or loss. For calculating the point of break-even checkout our brokerage calculator.
This report is only for the information of our customers. Recommendations, opinions, or suggestions are given with the understanding that readers acting on this information assume all risks involved. The information provided herein is not to be construed as an offer to buy or sell securities of any kind. ATS and/or its group companies do not as assume any responsibility or liability resulting from the use of such information.