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.
Worked example: selling 1 lot of NIFTY 22,500 CE at ₹120
- Lot size
- 65
- Sell premium
- ₹120 × 65 = ₹7,800
- STT rate (option sell, on premium)
- 0.15%
- ₹7,800 × 0.15%
- ₹11.70
STT on this leg
₹11.70
If you buy the same option back to close the position, there is no STT on the buy side. Buying-and-letting-expire (in-the-money) historically triggered STT on the intrinsic value at settlement. Verify with your broker before holding ITM options to expiry.
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 0.05% of contract value.
- Equity options: sell side, on the premium (not the notional), around 0.15%.
- 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.