Securities Transaction Tax (STT)
Securities Transaction Tax (STT) is a statutory tax levied by the Government of India on the purchase and sale of securities that trade on a recognised stock exchange such as the NSE and BSE. It applies to equity shares, equity-oriented mutual funds, and equity derivatives (futures and options), and is collected by the exchange or clearing member at the time of the trade and remitted to the government. STT is one of several mandatory charges that sit on top of brokerage on an Indian securities trade.
Also called: STT, Securities Transaction Tax, Securities Transaction Tax STT, transaction tax, share transaction tax
Formula
STT = applicable STT rate x (turnover or premium or settlement value, as defined for that segment and side)
How it is read
STT is commonly read as a fixed regulatory cost component whose amount depends on the segment and on whether a trade is intraday or delivery. For delivery-based cash equity, STT is typically charged on both the buy and sell legs, whereas for intraday (and for equity futures) it is typically charged on the sell leg only; for options, STT generally applies to the sell side, with the basis differing for options that are exercised. Because the percentage rates are small but apply to turnover, traders usually look at STT as part of the total cost of a round-trip rather than in isolation, and a charges or cost calculator is commonly used to estimate the combined effect of STT, brokerage, exchange fees, stamp duty, and GST before comparing the net outcome of a trade.
What it does not tell you
STT is a tax on the transaction, not a measure of profit, risk, or the quality of a trade, so a low STT does not imply a favourable outcome and a high STT does not imply an unfavourable one. The exact rate and the side on which it is charged differ by segment (cash delivery, cash intraday, futures, options) and are periodically revised by the government, so any specific percentage should be confirmed against the current official schedule rather than assumed. STT is also distinct from capital gains tax, GST, stamp duty, and exchange transaction charges; seeing STT on a contract note says nothing about those other line items, and the figure shown by a calculator is an estimate that can differ from the broker's final billed amount.
NiftyLens provides general educational information and user-input mathematical utilities. It does not provide personalised investment advice, research recommendations, trade calls, price targets or suitability assessments. Market-calendar, settlement and transaction-cost information may change and should be verified against current official exchange, clearing, broker, depository and tax records. Trading and investing involve risk; you remain responsible for your own decisions and should seek appropriately qualified professional advice where needed.