STT (Securities Transaction Tax)

Securities Transaction Tax(STT) is a small percentage the Government of India collects on every trade you place on a recognized stock exchange. It’s deducted automatically by your broker - you don’t file it separately. The amount looks tiny on one ticket but compounds fast when you trade actively, especially in F&O.

STT rates vary by segment and by which side of the trade is taxed. The biggest gotchas: equity intraday and futures are charged only on the sell side; option STT is on the premium, not the notional value of the contract; and currency derivatives are STT-free.

STT by segment (indicative)

Rates change in nearly every Union Budget - these are the ranges in force at time of writing. Use the brokerage calculator for the current, itemized number on a specific trade.

• Equity delivery - charged on both buy and sell, around 0.1% each side.
• Equity intraday - sell side only, around 0.025%.
• Equity futures - sell side only, around 0.02% of contract value.
• Equity options - sell side, on the premium (not the notional), around 0.10%.
• Currency derivatives - no STT.
• Commodity - uses CTT (Commodities Transaction Tax) with similar logic.

Why active traders feel it more

A delivery investor who buys once and sells once a year pays STT twice. A scalper who does 20 round-trips a day pays STT on every single sell. Over a year of active trading, STT can be larger than brokerage - and unlike brokerage, you can’t negotiate a discount with the exchange.

STT is deductible as a business expense (if you file ITR-3)

If you classify your trading as business income - which active F&O and intraday traders typically must - STT, brokerage, GST, and exchange charges are all deductible from your gross trading P&L. That alone often saves more in tax than the cost of keeping a proper trade journal.