Taxes · 6 min read

STT explained: the tax on every trade

Securities Transaction Tax is one of the quietest line items on your contract note — and one of the most important to understand.

Securities Transaction Tax, or STT, is a tax the central government levies on trades in listed securities. You never pay it separately — your broker collects it automatically and deposits it on your behalf. It’s small on a single trade, but because it’s a percentage of trade value, it grows with the size of your positions.

Why STT exists

STT was introduced to make tax collection on market transactions simple and automatic. Instead of chasing individual capital-gains declarations on every trade, the tax is captured at the point of the transaction itself. For traders, the practical takeaway is that it’s unavoidable and applies on top of brokerage.

How STT differs by segment

This is the part most new traders miss: STT is not charged the same way everywhere. The side it applies to, and the rate, depend on what you’re trading.

Segment	Charged on	Typical basis
Equity delivery	Buy & sell	Trade value, both sides
Equity intraday	Sell only	Sell-side trade value
Futures	Sell only	Sell-side contract value
Options	Sell only	Premium value on sell

Rates are revised by the government from time to time (for example in the annual budget). The exact percentages matter less than the principle: delivery is taxed on both sides, while intraday and F&O are taxed on the sell side. The calculator applies the current basis for each segment automatically.

A simple example

Imagine you buy and sell shares worth ₹1,00,000 on each side in delivery. STT applies to both the ₹1,00,000 buy and the ₹1,00,000 sell. In intraday, the same round trip would only attract STT on the sell side — which is one reason intraday STT is lighter than delivery for the same turnover.

Options: watch the premium

For options, a common mistake is calculating STT on the strike or notional value. It’s charged on the premium — the actual price you pay or receive for the option. This keeps options STT far smaller in absolute terms than the contract’s notional size would suggest, but it still adds up across many lots.

The bottom line

STT is a fixed cost of participating in the market. You can’t avoid it, but you can account for it. Knowing whether it hits one side or both — and on what value — helps you estimate your true breakeven before you enter.

Educational content only, not tax or investment advice. Rates change over time; confirm current figures with your broker or a qualified professional.

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