What are the latest Securities Transaction Tax (STT) rates in Indian stock markets?
Securities Transaction Tax (STT) is an upfront direct tax levied on transactions conducted on recognized Indian stock exchanges (NSE/BSE). Following the statutory revisions: (1) Equity Delivery attracts 0.1% on both Buy and Sell; (2) Equity Intraday attracts 0.025% on Sell only; (3) Equity Futures attract 0.02% on Sell only; and (4) Equity Options attract 0.1% on Sell only (calculated on option premium). STT is deducted automatically on your broker's digital contract note.
1. What is Securities Transaction Tax (STT)?
Introduced in the Union Budget 2004 under Chapter VII of the Finance (No. 2) Act, 2004, Securities Transaction Tax (STT) replaced the earlier cumbersome long-term capital gains tax structure on listed equities. It was designed as an unavoidable, friction-free turnover tax collected at source directly through stock exchange clearing corporations (NSE Clearing Ltd and Indian Clearing Corporation Ltd).
Because it is embedded directly in the trade settlement architecture, an investor or trader cannot evade STT; it is debited from your trading ledger the moment a trade executes.
2. Who Pays STT in India?
Every entity executing transactions in equity shares, equity mutual funds, and derivative contracts on a recognized stock exchange in India is subject to STT:
- Retail Investors: Buying and selling bluechip shares or index ETFs for long-term compounding.
- Day Traders: Executing intraday momentum trades in the cash market.
- F&O Traders: Trading weekly and monthly index/stock futures and call/put options.
- Institutional Investors: Domestic Mutual Funds (DIIs), Alternate Investment Funds (AIFs), and Foreign Portfolio Investors (FPIs).
3. Complete STT Rates Master Schedule Across Segments
| Segment | Buy Side STT Rate | Sell Side STT Rate | Value on Which STT is Calculated |
|---|---|---|---|
| Equity Shares (Delivery) | 0.10% | 0.10% | Full settlement value (Price × Quantity) |
| Equity Shares (Intraday) | Nil (0.00%) | 0.025% | Sell settlement value |
| Equity Futures (Index & Stock) | Nil (0.00%) | 0.02% (Revised) | Total contract turnover (Price × Lot Size) |
| Equity Options (Normal Sale) | Nil (0.00%) | 0.10% (Revised) | Option Premium value only |
| Equity Options (Exercised) | Nil (0.00%) | 0.125% | Settlement price (Intrinsic value) |
| Equity Mutual Fund Units | Nil (0.00%) | 0.001% | Redemption NAV value |
4. How STT is Collected & Cleared
The collection mechanism is 100% automated:
1. Trade Execution: When an order matches on NSE/BSE, the exchange computes STT down to the exact paisa.
2. Daily Clearing: Clearing corporations debit the aggregate STT from your stockbroker's settlement account at end of day.
3. Contract Note: The broker reflects the exact STT charged in the statutory tax breakup of your electronic contract note (Form A / Form B).
4. Treasury Remittance: Stock exchanges deposit all collected STT directly with the Central Government before the 7th of the following month.
5. Exchange-Traded vs Off-Market Trades
STT applies strictly to transactions executed on recognized stock exchanges. If you transfer shares off-market via a physical Delivery Instruction Slip (DIS) or through CDSL/NSDL Easiest to a family member, zero STT is paid. However, off-market transfers cannot avail the concessional 12.5% LTCG under Section 112A, as Section 112A mandatorily requires proof of STT payment!
6. The Revised F&O STT Hike: Real Financial Impact
Impact on Equity Futures (0.02%)
Selling 1 lot of Nifty Futures (lot size 25 @ 25,000 index = ₹6,25,000 turnover) earlier incurred STT of ₹78 (0.0125%). Under the revised 0.02% rate, STT rises to ₹125 per lot (a 60% increase in tax friction).
Impact on Equity Options (0.1%)
Selling 10 lots of Bank Nifty Call Options at ₹200 premium (200 × 150 shares = ₹30,000 premium turnover) earlier incurred STT of ₹18.75. Under the revised 0.1% rate, STT rises to ₹30 per trade.
7. How to Read STT on Your Electronic Contract Note
Under SEBI mandates, every contract note issued by your broker (Zerodha, Groww, Angel One, ICICI Direct) displays a detailed "Statutory & Other Levies" table:
- Securities Transaction Tax (STT): Highlighted in bold; rounded off to the nearest rupee.
- Exchange Transaction Charges: NSE (~0.00297%) and BSE turnover charges.
- SEBI Turnover Fees: ₹10 per crore of turnover.
- GST (18%): Charged on Brokerage + Exchange Transaction Charges + SEBI Fees (GST is never charged on STT!).
- Integrated Stamp Duty: Charged on buy orders only under the Indian Stamp Act.
8. Step-by-Step STT Calculation SOP
Example: Buying & Selling 100 Shares of Reliance at ₹3,000 Delivery
1. Buy Side Turnover: 100 × ₹3,000 = ₹3,00,000 → Buy STT @ 0.1% = ₹300
2. Sell Side Turnover (Sold at ₹3,200): 100 × ₹3,200 = ₹3,20,000 → Sell STT @ 0.1% = ₹320
3. Total STT Paid on Trade: ₹300 + ₹320 = ₹620
Example: Intraday Trade (Bought at ₹3,000, Sold at ₹3,020)
1. Buy Side STT: ₹0.00 (Intraday buy is exempt)
2. Sell Side Turnover: 100 × ₹3,020 = ₹3,02,000 → Sell STT @ 0.025% = ₹75.50 (Rounded to ₹76)
3. Total STT Paid: ₹76
9. Historical STT Rate Progression (2018 to 2026)
| Instrument | Pre-2023 Rate | 2023–2024 Rate | Revised 2026 Statutory Rate |
|---|---|---|---|
| Equity Futures (Sell) | 0.010% | 0.0125% | 0.020% (+60% Hike) |
| Equity Options (Sell on Premium) | 0.050% | 0.0625% | 0.100% (+60% Hike) |
| Equity Delivery (Buy & Sell) | 0.100% | 0.100% | 0.100% (Unchanged) |
10. Real-World Case Study: F&O Trader Annual Tax Deduction
Rajiv is a full-time option seller who generated ₹18 Lakh in net trading profit during FY 2024-25. His annual contract notes show he paid ₹1,45,000 in STT charges.
Because Rajiv files his tax return under ITR-3 as Business Income (PGBP), Section 36(1)(xv) allows him to claim the entire ₹1,45,000 as an allowable business deduction. His taxable business income reduces from ₹18,00,000 to ₹16,55,000, saving him over ₹45,000 in direct income tax!
11. Common Mistakes Regarding STT
1. Trying to Deduct STT from Capital Gains
If you file your investments under Capital Gains (Schedule CG in ITR-2), the Income Tax Department explicitly disallows deducting STT from sale consideration or adding it to purchase cost. STT can only be deducted if income is declared as business income under PGBP!
2. Believing Options STT is Charged on Strike Price
A recurring myth is that STT is charged on the notional strike price (e.g. 25,000 index level). By law, for normal non-exercised options trades, STT is charged strictly on the premium turnover (e.g. ₹150 premium × lot size), not the strike price!
12. Scalping Friction & Breakeven Points
With STT rising to 0.1% on options and 0.02% on futures, high-frequency scalpers who target tiny 1-point or 2-point gains face severe friction. In an option trade where premium is ₹100, the STT alone consumes 0.10 points, which when combined with GST and exchange fees requires a larger target move just to break even.
13. Statutory Provisions & Section 36(1)(xv)
Chapter VII of Finance (No. 2) Act, 2004: The governing statutory legislation defining taxable securities transactions, valuation rules, and collection duties.
Section 36(1)(xv) of Income Tax Act, 1961: Authorizes full deduction of STT paid by an assessee if capital gains arising from such securities are computed as business income.
Section 10(38) vs Section 112A: Concessional 12.5% LTCG tax regime conditioned upon payment of STT.
14. Strategic Choice: Investor vs Trader Classification
If your annual STT bill exceeds ₹50,000, consider classifying your trading activity as Business Income (ITR-3). This allows you to claim STT, advisory subscriptions, office rent, internet, and laptop depreciation as valid tax deductions against your trading profits.
15. Monthly Contract Note & STT Audit Checklist
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16. Frequently Asked Questions (FAQs)
What are the revised STT rates on Futures and Options (F&O) in 2026?
Under the revised statutory amendments, STT on the sale of equity futures was increased to 0.02% (from 0.0125%), and STT on the sale of equity options was increased to 0.1% on premium value (from 0.0625%).
Is STT charged on both buying and selling of equity shares in delivery trades?
Yes. For delivery-based equity share transactions on recognized stock exchanges (NSE/BSE), STT is levied at 0.1% on the buy side and 0.1% on the sell side on the full transaction turnover.
Is STT charged on buying intraday shares or buying options?
No. In equity intraday trading, STT (0.025%) is charged ONLY on the sell side. In equity options trading, STT (0.1%) is charged ONLY on the sell side on option premium value. Buying options carries zero STT.
Can an investor or trader claim STT as an expense to reduce income tax?
If trading is treated as 'Business Income' (Profits and Gains from Business or Profession - PGBP), STT is fully deductible as an operating expense under Section 36(1)(xv) of the Income Tax Act. If income is treated as Capital Gains (investors), STT cannot be added to the cost of acquisition or deducted from sale proceeds.
Is STT charged on commodity futures (MCX) and currency trading?
Commodity trading is subject to Commodities Transaction Tax (CTT) at 0.01% on non-agricultural commodity futures, not STT. Currency derivatives (USD/INR, EUR/INR) are completely exempt from both STT and CTT.