Securities Transaction Tax (STT) in India: Current Rates and Worked Examples

What Securities Transaction Tax actually is

Securities Transaction Tax (STT) is a tax on the transaction itself, charged every time you buy or sell a security listed on a recognised Indian stock exchange such as the NSE or BSE. It applies to equity delivery, intraday equity, futures, options, and the redemption of equity-oriented mutual fund units. It was introduced by the Securities Transaction Tax Act, 2004 and is administered under the Income Tax Act framework, with the Central Board of Direct Taxes overseeing it rather than SEBI.

The important practical point is that STT is collected at source by your broker and shown on your contract note. You never file or pay it separately. The exchange remits it to the government. Because it is charged on transaction value (or on premium for options), it is a fixed, unavoidable cost of doing the trade, completely separate from any profit or loss you make. Even a losing trade pays STT.

STT also does a second job in the tax system. The concessional capital gains rates for listed equity, namely 20% short-term under Section 111A and 12.5% long-term under Section 112A, are only available because STT was paid on the transaction. If STT had not been charged, those gains would be taxed at your normal slab rate instead. So STT is both a cost and a gatekeeper to lower tax.

The current STT rates after the October 2024 hike

This is the section most outdated articles get wrong, so read it carefully. Budget 2024 raised STT on F&O, and the new rates took effect on October 1, 2024. If you are reading a source that still quotes options at 0.0625%, 0.05% or 0.10%, or futures at 0.0125%, 0.01% or 0.02%, that source is stale. The table below shows the rates in force now.

• Options are taxed on the premium, not on the full strike or notional value, so the rupee amount is smaller than it looks at first glance.
• Futures are taxed on the notional sell value (price multiplied by lot size), which makes a large rupee STT even though the percentage is tiny.
• Intraday equity and all F&O charge STT on the sell side only, so you pay it when you exit, not when you enter.
• Equity delivery is the exception that charges STT on both legs.

Worked example 1: selling a Nifty option

These numbers are illustrative and meant to show the method, not to promise any return. Suppose you sell one lot of a weekly Nifty 24,000 call option at a premium of Rs 120. The Nifty lot size is 65, so the premium value of the trade is 120 multiplied by 75, which is Rs 9,000. STT on options is charged on the sell side at 0.15% of premium.

STT on this sell is 0.15% of Rs 9,000, which is Rs 13.5. Under the old pre-October 2024 rate of 0.0625%, the same trade would have cost Rs 5.63 in STT, so the cumulative hikes added about Rs 7.87 per lot on this single exit. That looks trivial on one lot, but an active option writer turning over 50 lots a day pays roughly Rs 450 in options STT daily under the new rate against about Rs 280 under the old one, and that difference compounds across a month of trading.

Worked example 2: a Bank Nifty futures round trip

Again, these figures are illustrative. Suppose you buy one lot of Bank Nifty futures at 51,000 and sell it later at 51,300. The Bank Nifty lot size is 30. Your gross profit is 300 points multiplied by 15, which is Rs 4,500 before costs.

STT on futures is 0.05% of the sell value on the sell side only. The sell notional is 51,300 multiplied by 15, which is Rs 7,69,500. STT is 0.05% of that, which is about Rs 385. Under the old 0.0125% rate the same exit would have cost about Rs 96, so the cumulative hikes added roughly Rs 289 to this one futures trade. Notice how a tiny percentage turns into a three-figure rupee cost because futures STT applies to the full notional, not just your profit.

The exact brokerage and statutory charges vary by broker and by the day, so treat the bottom row as an estimate. The point that matters is that STT alone took roughly Rs 154 out of a Rs 4,500 gross profit, about 3.4% of the gain, before any other cost. On a scalping-style strategy that aims for 50 to 80 points, STT becomes a meaningful share of every winning trade and the full burden on every losing one.

Worked example 3: equity delivery in a real stock

Delivery is the one segment where STT hits both legs. Suppose you buy 50 shares of Reliance Industries at Rs 1,400 and sell them months later at Rs 1,600. These prices are illustrative. Your buy value is Rs 70,000 and your sell value is Rs 80,000, for a gross profit of Rs 10,000.

• STT on buy: 0.1% of Rs 70,000 equals Rs 70.
• STT on sell: 0.1% of Rs 80,000 equals Rs 80.
• Total STT for the round trip: Rs 150.
• This Rs 150 is also exactly what makes the gain eligible for the concessional 12.5% LTCG rate under Section 112A if held over 12 months.

If you held these shares for more than 12 months, the Rs 10,000 gain is long-term. Long-term gains on listed equity are tax-free up to Rs 1.25 lakh per financial year and taxed at 12.5% above that. So if this was your only equity gain for the year, the Rs 10,000 sits inside the Rs 1.25 lakh exemption and attracts no LTCG tax, while you still paid Rs 150 STT. If you had sold within 12 months, the gain would be short-term and taxed at 20% under Section 111A, which is Rs 2,000 plus cess.

How STT interacts with capital gains and business income

Whether you can deduct STT depends entirely on how your trading is taxed. If you report intraday or F&O as business income, which is the normal treatment, then STT is a legitimate business expense and is fully deductible from your trading turnover before arriving at taxable profit. F&O profit is taxed at your applicable slab rate, not at the special equity rates, because it is business income rather than capital gains.

If instead your transaction is treated as a capital gain, typically delivery-based equity held as an investment, then STT is not deductible from the gain. You cannot add STT to your cost of acquisition either. Its only role on the capital gains side is qualifying you for the lower rates: 20% short-term under Section 111A for holdings of 12 months or less, and 12.5% long-term under Section 112A above the Rs 1.25 lakh annual exemption for holdings beyond 12 months. A 4% health and education cess applies on top of the tax.

STT versus the other charges on your contract note

STT is only one line on your contract note, and traders often confuse it with the other statutory and broker charges. Knowing the difference helps you read your own costs accurately and spot when a calculator is using stale numbers.

• STT: tax on the transaction, rates above, collected at source.
• Exchange transaction charges: a per-trade fee charged by NSE or BSE, separate from STT and much smaller per lot.
• SEBI turnover fee: a tiny regulator fee, currently around Rs 10 per crore of turnover.
• Stamp duty: a state levy charged on the buy side only, for example 0.003% on equity delivery buy and 0.002% on futures buy.
• GST: 18% charged on brokerage plus exchange charges, not on STT itself.
• Brokerage: your broker's own fee, which discount brokers often set at a flat amount or zero on delivery.

A crucial detail: GST is charged on brokerage and exchange charges, but not on STT. STT is a tax, and you are not taxed again on it. This is why STT shows as its own line on the contract note and is excluded from the GST base.

Why options sellers feel the October 2024 hike most

The October 2024 STT increase was aimed squarely at the explosion of retail F&O activity, especially weekly expiry option buying and selling. Because options STT is charged on the premium on the sell side, anyone who frequently writes or exits options pays it on every single closed position. For a high-frequency option writer running dozens of lots a session, the move from 0.0625% to 0.15% is a 140% jump in that specific cost line.

The effect is sharpest on cheap, far out-of-the-money options traded near expiry, where the premium is small but the trade count is huge. It is gentler on deep in-the-money positions held to expiry, where the 0.15% settlement STT on intrinsic value dwarfs the premium STT anyway. The strategic takeaway is simple: if your edge depends on thin margins and very high turnover, you must rebuild your cost model around the post-October-2024 rates, because the old numbers will quietly overstate your expectancy.

Practical ways to keep STT under control

You cannot avoid STT, but you can stop it from quietly eating your returns. The biggest lever is turnover. Since intraday and F&O charge STT on the sell side of every position, fewer and higher-quality trades mean less cumulative STT than a strategy that churns constantly for tiny moves.

• Square off in-the-money options before expiry to avoid the much larger 0.15% settlement STT on intrinsic value.
• Use your broker's brokerage calculator with current rates so STT is built into your breakeven before you enter.
• If you trade F&O or intraday seriously, report it as business income so STT becomes a deductible expense.
• Keep your contract notes and an annual cost summary, since STT paid is needed to support both your business-income deductions and your capital gains classification.
• Do not double count: STT is collected by the broker, so you never pay it again separately when filing your return.

Compliance, records and who collects STT

STT is collected by the recognised stock exchange through your broker at the time of the transaction and remitted to the government. As a trader you have no separate STT filing to do. Your responsibility is to keep accurate records, because the STT figures feed into your income tax return either as a business expense or as evidence that your equity gains qualify for the concessional Section 111A and 112A rates.

Each contract note lists the STT charged per segment, and your broker provides an annual statement or a tax profit and loss report that totals it. Keep these. If you are audited, or if your turnover crosses the threshold that requires a tax audit, clean STT records make the process straightforward. Always confirm the exact current rate and any mid-year change against the official notification before relying on it, because F&O STT in particular has changed recently.

Sources and further reading

For authoritative data and the latest notifications, refer to the Income Tax Department, NSE India and your broker's own brokerage calculator. STT rates, especially on F&O, can change in a Union Budget, so always confirm the current rate and contract specifications on the official source before you trade. The rates described here reflect the structure in force after October 1, 2024.

Sources and Further Reading

For authoritative data and further reading on this topic, refer to CBIC, NSE India and Income Tax Department. Always confirm current rules, rates and contract specifications on the official source before you trade.