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What is Securities Transaction Tax or STT?


Securities Transaction Tax (STT) is a tax applied on purchase and sale of equity, derivatives and mutual funds.


Say for example: If you purchase shares of the XYZ company , the STT will be included along with the purchase price which would also includes service tax and an education cess charge. Similarly, when you sell, STT will be deducted by broker or AMC depending on the value of shares.

What is Securities Transaction Tax or STT?

Security transaction is taxed at source so that investors cannot escape from capital gains tax. No STT will apply for off-market transactions.

How much is the Securities Transaction Tax?

Where buying or selling stocks or equity oriented mutual funds, the STT rate is 0.125% of the total transaction value. While for derivatives the tax is 0.017% only on the seller.

What has to be done?

At the end of the year, you can ask your broker to provide you a certificate of the STT that you have paid through the year. Get the amount deducted from your short term capital gains to save tax.

STT are applicable for securities of the following nature:


* Shares, scrips, stocks, bonds, debentures, debenture stock or other marketable securities of a like nature in or of any incorporated company or other body corporate.
* Derivatives
* Units or any other instrument issued by any collective investment scheme to the investors in such schemes
* Security receipt as defined in section 2(zg) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002
* Government securities of equity nature
* Such other instruments as declared by the Central Government
* Rights or interest in securities
* Equity-oriented mutual fund.

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