What Is Securities Transaction Tax (STT) and How Does It Work?
When you buy or sell securities, brokerage is not the only cost you may see on your contract note. One of the statutory charges that can apply is Securities Transaction Tax (STT).
STT is charged on specified securities transactions in India, and the rate depends on what you trade and whether you are buying or selling. Here is how it works, how it is calculated and the latest applicable rates.
What is STT?
Securities Transaction Tax (STT) is a tax charged on specified transactions involving securities through recognised stock exchanges in India.
It was introduced in 2004 and is collected as part of the transaction itself. Depending on the type of trade, STT may be payable by the buyer, seller or both.
How Does STT Work?
STT is calculated automatically when an eligible transaction is executed. You do not need to calculate or pay it separately to the government.
The process generally works like this:
- You place a buy or sell order.
- The trade is executed on the exchange.
- The applicable STT rate is applied.
- The charge appears in your contract note or transaction statement.
- The collected amount is deposited as required under the tax framework.
The person who pays STT depends on the type of transaction.
How is STT Calculated?
STT is calculated by applying the prescribed STT rate to the taxable value of the transaction. The calculation basis can differ across equity, futures and options.
A simple formula is
STT = Taxable Transaction Value × Applicable STT Rate
For example, suppose you sell equity shares worth ₹50,000 in a delivery-based transaction.
Applicable STT rate = 0.1%
STT = ₹50,000 × 0.1% = ₹50
The actual taxable value used may depend on the specific transaction and segment.
What Are the STT Charges Across Different Market Segments?
STT rates vary depending on whether you trade equity delivery, intraday equity, futures, options or equity-oriented mutual funds.
The latest rates applicable from 1 April 2026 are:
STT Rates in India
| Transaction | STT Rate | Who Pays? |
| Equity delivery – Buy | 0.1% | Buyer |
| Equity delivery – Sell | 0.1% | Seller |
| Equity intraday – Sell | 0.025% | Seller |
| Equity futures – Sell | 0.05% | Seller |
| Equity options – Sell | 0.15% on option premium | Seller |
| Exercised equity options | 0.15% on intrinsic value | Buyer |
| Equity-oriented mutual funds – Purchase | Nil | Not applicable |
| Equity-oriented mutual funds – Delivery sale | 0.001% | Seller |
The 2026 Budget increased STT on futures from 0.02% to 0.05%, options premium from 0.10% to 0.15%, and exercised options from 0.125% to 0.15%, effective 1 April 2026.
STT Charges on Equity Delivery
For delivery-based equity transactions, STT is charged at 0.1% on both the purchase and sale value.
This means:
- Buyer: Pays 0.1% when buying shares for delivery.
- Seller: Pays 0.1% when selling delivery-based shares.
For example, if you buy shares worth ₹1 lakh for delivery:
STT = ₹1,00,000 × 0.1% = ₹100
The seller would similarly pay STT based on the value of the sale transaction.
STT on Intraday Trading
STT on equity intraday trading is charged at 0.025% on the sell side of the transaction.
For example, if you sell shares worth ₹1 lakh as part of an intraday trade:
STT = ₹1,00,000 × 0.025% = ₹25
STT is not charged separately on the intraday purchase side under this category.
STT on Futures and Options
STT applies differently to futures and options. From 1 April 2026, the rates for both segments have increased.
- Equity Futures: STT is charged at 0.05% on the sale value of a futures contract and is payable by the seller.
- Options Sold: STT is charged at 0.15% of the option premium and is payable by the seller.
- Exercised Options: If an option is exercised, STT is charged at 0.15% of the intrinsic value and is payable by the purchaser.
These rates replaced the earlier rates of 0.02% on futures, 0.10% on option premium and 0.125% on exercised options.
STT on Mutual Funds
STT applies to certain transactions involving equity-oriented mutual fund units. It is generally charged on the sale or redemption side, not on purchase.
For equity-oriented mutual fund units:
- Purchase: No STT
- Sale or redemption: 0.001% payable by the seller
The applicability of STT depends on the type of mutual fund and transaction.
Who Pays STT?
Who pays STT depends on the type of securities transaction. In some trades the buyer pays, in others the seller pays, and for equity delivery both sides are charged separately.
| Transaction | STT Paid By |
| Equity delivery purchase | Buyer |
| Equity delivery sale | Seller |
| Equity intraday sale | Seller |
| Futures sale | Seller |
| Options sale | Seller |
| Exercised option | Buyer |
| Equity-oriented mutual fund sale | Seller |
This is why STT can appear differently depending on the market segment you trade in.
STT vs Other Trading Charges
STT is only one part of the total cost of a securities transaction. Brokerage, GST, exchange charges, SEBI charges and stamp duty may also apply.
| Charge | What It Means |
| STT | Government tax on specified securities transactions |
| Brokerage | Fee charged by the broker for executing orders |
| Exchange Transaction Charges | Charges levied for exchange services |
| GST | Tax applicable on certain brokerage and transaction-related services |
| SEBI Charges | Regulatory charges |
| Stamp Duty | Duty charged on specified securities transactions |
Your total trading cost can therefore be higher than the brokerage amount alone.
Also read: difference between direct tax and indirect tax!
Is STT Refundable?
STT is generally charged based on the transaction itself and is not automatically refunded simply because the trade results in a loss.
Its treatment for income-tax purposes can depend on whether your securities income is treated as capital gains or business income.
Therefore, STT should not be treated as a refundable trading charge.
Is STT Charged Even If You Make a Loss?
Yes. STT is based on the securities transaction, not on whether you make a profit or loss.
For example, if you sell an eligible security at a loss, applicable STT can still be charged because the taxable transaction has taken place.
Does STT Affect Your Trading Cost?
Yes. STT adds to the overall cost of eligible securities transactions, along with brokerage and other statutory charges.
For frequent traders, even relatively small transaction-based charges can add up across multiple trades.
Checking your contract note can help you understand how much you are paying towards STT and other charges.
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Disclaimer- The rankings and figures in this article have been compiled from multiple verified reports, credible news sources, and public financial data available as of 2026.
All values are approximate and may vary with newer updates, revisions, or changes in official records.
FAQs
Securities Transaction Tax (STT) is a tax levied on specified securities transactions in India. It applies to transactions such as eligible equity shares, equity-oriented mutual funds, futures and options.
STT is charged when an eligible securities transaction takes place. Depending on the transaction, it may apply on the purchase, sale or both sides.
It depends on the transaction. For equity delivery, the buyer pays STT on purchase and the seller pays it on sale. For intraday equity, futures and options sales, STT is generally payable by the seller.
STT is calculated by applying the applicable STT rate to the taxable transaction value. The calculation basis varies by segment. For example, STT on an options sale is calculated on the option premium.
For equity shares settled through delivery, STT is 0.1% on the purchase and 0.1% on the sale. For non-delivery equity transactions such as intraday trades, it is 0.025% on the sell side.
Yes, STT applies to certain transactions in equity-oriented mutual funds. There is no STT on their purchase, while eligible delivery-based sales or redemptions attract 0.001% STT, payable by the seller.
STT is a transaction-based tax and is not refunded simply because an investment or trade results in a loss.
No. STT and capital gains tax are separate taxes. STT is charged on specified securities transactions, while capital gains tax may apply to the profit earned when an investment is sold, subject to applicable tax rules.
STT is a statutory tax on specified securities transactions, while brokerage is a fee that a broker may charge for executing transactions. The STT rate is prescribed by law, whereas brokerage depends on the broker’s pricing structure.
STT adds to the overall transaction cost of eligible investments and trades. The amount depends on the type of security, transaction value and whether it is a purchase or sale.
