If you are just beginning your stock market journey, you’ve probably come across the term STT many times—in your contract note, on your broker’s charges page, or while calculating your profits. STT may look like a small number, but it directly affects how much money you take home after a trade.
In this easy-to-understand guide, we’ll break down what STT charges are, how they work, how they’re calculated, and share real examples so you never get confused again.
What Is STT (Securities Transaction Tax)?
Securities Transaction Tax (STT) is a tax charged by the Government of India on the buying and/or selling of securities on recognized stock exchanges such as NSE and BSE.
Think of it like a small fee you pay every time you trade:
When you buy a stock
When you sell a stock
When you trade in equity delivery, intraday, futures, options
When you exercise certain options contracts
STT is automatically deducted by your broker and paid to the government. You don’t have to calculate or pay it separately.
Why Does STT Exist?
The government introduced STT to:
Simplify the taxation of market transactions
Prevent tax evasion
Increase transparency
Ensure systematic tax collection from traders and investors
Before STT was introduced in 2004, traders used to pay capital gains tax on each trade, which made compliance difficult. STT made the process simpler.
Who Has to Pay STT?
Anyone trading on the stock exchange:
✔ Retail Investors
✔ Intraday Traders
✔ F&O Traders
✔ Long-Term Investors
✔ Algo / HFT Traders
If your trade is eligible for STT, it is automatically applied.
Current STT Rates in India
Transaction Type | STT Rate |
|---|---|
| Equity Delivery | 0.1% on buy + 0.1% on sell |
| Equity Intraday | 0.025% on sell side only |
| Equity Futures | 0.02% on sell side |
| Equity Options | 0.1% on sell side (on premium) |
| Options Exercised | 0.125% on intrinsic value |
| Currency Futures & Options | No STT |
| Commodity Futures (Non-Agri) | CTT: 0.01% on sell side |
| Commodity Options | CTT: 0.05% on sell side |
Note:
For commodities, the tax is called CTT (Commodity Transaction Tax) but works similarly to STT.
Why Should You Care About STT Charges?
Even though STT looks tiny, it affects:
Your intraday P&L
Your long-term investment returns
Your options selling premium income
Your overall brokerage + tax bill
Traders who take multiple trades daily feel its impact even more.
How Is STT Calculated?
Let’s break down the calculations for each segment so beginners can understand clearly.
1. STT on Equity Delivery (0.1% on Buy + 0.1% on Sell)
Example:
You buy 100 shares of TCS at ₹3,500 and later sell at ₹3,600.
STT on Buy:
0.1% of (100 × 3500)
= 0.1% of ₹3,50,000
= ₹350
STT on Sell:
0.1% of (100 × 3600)
= 0.1% of ₹3,60,000
= ₹360
Total STT Paid = ₹350 + ₹360 = ₹710
This is why delivery trading sometimes feels expensive.
2. STT on Equity Intraday (0.025% on Sell Side Only)
Example:
You buy and sell 500 shares of Infosys @ ₹1,500 in intraday.
We only calculate STT on sell value.
Sell Value = 500 × 1500 = ₹7,50,000
STT = 0.025% of 7,50,000 = ₹187.50
Intraday has lesser STT than delivery, which is good for active day traders.
3. STT on Equity Futures (0.02% on Sell Side Only)
Example:
You exit a NIFTY future at ₹22,000 per lot (50 quantity).
Sell value = 22,000 × 50 = ₹11,00,000
STT = 0.02% of 11,00,000 = ₹220
4. STT on Equity Options (0.1% on Premium on Sell Side)
Important: Only premium value, not contract value, is considered.
Example:
You sell NIFTY 22,000 CE @ ₹100 premium, lot size 50.
Premium value = 100 × 50 = ₹5,000
STT = 0.1% of 5,000 = ₹5
Very small — this is why option selling is popular.
5. STT on Exercised Options (0.125% on Intrinsic Value)
This is where traders often get shocked.
Example:
You bought NIFTY 22,000 CE, and it expires at 22,200 (ITM).
Intrinsic value = 200 × 50 = ₹10,000
STT = 0.125% of 10,000 = ₹12.5
If ITM is deep, this number increases.
This is why traders avoid holding long options till expiry.
6. Currency Derivatives (No STT)
USD-INR Futures
USD-INR Options
No STT at all.
This makes currency trading cheaper than equity F&O.
7. STT (CTT) on Commodities
| Commodity Type | Tax | Rate |
|---|---|---|
| Non-Agri Commodity Futures | CTT | 0.01% on sell |
| Commodity Options | CTT | 0.05% on sell |
Example:
You sell a crude oil option with premium value ₹10,000.
CTT = 0.05% of 10,000 = ₹5
Why STT Matters for Traders
Here’s why understanding STT helps you trade better:
Avoid overtrading
High-frequency trading leads to higher cumulative STT.
Helps in strategy planning
Equity delivery: high STT
Intraday & options: lower STT
Currency: zero STT
Better P&L accuracy
You’ll know your break-even levels more clearly.
Avoid expensive mistakes
Holding ITM options till expiry = very high STT.
Pro Tips to Reduce the Impact of STT
1. Prefer Options Selling Over Buying
STT on selling options is very low (0.1% on premium only).
2. Avoid ITM Option Expiry
Square off before expiry to avoid 0.125% STT on intrinsic value.
3. Intraday Trading Has Lower STT
If you’re an active trader, intraday reduces costs.
4. Currency Trading = No STT
Useful for scalpers or high-frequency traders.
5. Check Contract Notes to Track Costs
Small STT differences can add up over hundreds of trades.
Examples of How STT Affects Your Net Profit
Suppose you made ₹1,000 profit in intraday trading.
STT = ₹187
Brokerage + GST + Exchange Fees = roughly ₹100
Net profit reduces to around ₹700.
This shows that STT can significantly impact short-term traders.
Frequently Asked Questions
1. What is STT in simple words?
STT is a tax charged by the government on buying or selling stocks and F&O.
2. Who pays STT?
Anyone trading in equity or F&O on recognized stock exchanges.
3. Is STT refundable?
No. STT is a non-refundable tax.
4. Do I need to pay STT manually?
No, brokers deduct STT automatically.
5. Why is STT higher in delivery trades?
Because they involve actual transfer of ownership.
6. Is STT applicable on intraday?
Yes, but only on the sell side at 0.025%.
7. Why is STT on exercised options high?
Because it is charged on intrinsic value, not premium.
8. Is STT applicable on cryptocurrencies?
No, as crypto is not regulated by SEBI or traded on stock exchanges.
9. Is STT applicable on mutual funds?
Yes, for equity mutual funds at 0.001% on redemption.
10. Is STT applicable on currency trading?
No. Currency F&O has zero STT.
Conclusion
STT may seem like just another small tax, but it significantly impacts your trading costs, especially if you trade frequently. By understanding how STT is charged on different segments — equity delivery, intraday, futures, options, and commodities — you can make smarter trading decisions and avoid unexpected losses.
Always check your contract note and be mindful of how STT affects your net returns. With this knowledge, you’re now better equipped to trade efficiently and reduce unnecessary costs in the Indian stock market.
