What is STT?
Securities Transaction Tax is a central government tax on securities transactions. Your broker collects it. Your broker does not keep it.
The basics
STT is levied by the Government of India on transactions in listed securities on a recognised stock exchange. It was introduced to tax securities transactions directly at the point of trade. It is collected by the broker at the time of the transaction and remitted to the government.
Because it is a tax, no broker can reduce, waive or discount it. A platform claiming to offer trading free of tax is describing something that does not exist in Indian law.
Which side is it charged on?
This is the part that confuses most new traders, because it differs by segment:
- Equity delivery — charged on both the buy and the sell.
- Equity intraday — charged on the sell side only.
- Futures — charged on the sell side only.
- Options — charged on the sell-side premium. Separately, exercised or assigned options attract STT on intrinsic value at a different rate.
The exercised-options rule is worth knowing. Traders have been caught out by letting a deep in-the-money option go to exercise rather than squaring off, and finding the STT on intrinsic value considerably larger than expected.
Why STT often dominates the charge list
On a delivery trade, STT is typically the single largest line item, frequently larger than brokerage even at full-service rates. This is the main reason why comparing brokers on brokerage alone gives a distorted picture: a large and identical part of your cost is unaffected by which broker you choose.
STT and your taxes
STT is separate from capital gains tax. Paying STT does not settle your income tax liability on gains, and gains remain reportable in your return. How STT interacts with your tax position depends on your circumstances and on current tax law.
Trade Grow does not provide tax advice. For anything beyond the mechanics described here, consult a qualified tax professional.
Where to see exactly what you paid
Your contract note itemises STT separately for each trading day. That document is the authoritative record — more so than any calculator, including ours.
Apply this to us
Everything above is a test you can run on Trade Grow. We would rather you did.