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What is STT (Securities Transaction Tax) and the 2024 F&O hike
STT is a small tax charged on the value of securities trades on Indian exchanges. From 1 October 2024 it rose to 0.1% on the sell side of options premium and 0.02% on the sell side of futures.
In one line
STT, the Securities Transaction Tax, is a levy charged on exchange trades in Indian securities, and since 1 October 2024 it is 0.1% of the premium on the sell side of options and 0.02% on the sell side of futures, up from 0.0625% and 0.0125% respectively.
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Where STT bites
STT is charged at the point of trade and collected by the exchange, so you never write a separate cheque for it. On delivery-based equity it is 0.1% on both the buy and the sell. On intraday equity it is 0.025% on the sell side only. On futures it is charged on the sell side, and on options it is charged on the premium on the sell side, with an additional charge on the settlement value of options that are exercised.
Because it sits on top of brokerage, exchange charges, GST, SEBI fees and stamp duty, STT is one slice of the all-in cost of a trade. For an active options trader the statutory charges, STT included, often dwarf the flat 20 rupee brokerage, which is why cost-aware traders compute the full charge stack, not just the headline fee.
Why the October 2024 hike happened
India's F&O turnover had ballooned, with the combined futures-and-options turnover of the NSE and BSE making up a large share of global derivatives volume. SEBI and the government wanted to gently raise the cost of speculative derivatives activity without freezing the market. The Budget 2024 answer was a higher STT on F&O, effective 1 October 2024.
In practice the futures sell-side STT went from 0.0125% to 0.02%, so 20 rupees per lakh sold instead of 12.50. The options sell-side STT went from 0.0625% to 0.1% of premium, so a 10,000 rupee option sale now carries 10 rupees of STT instead of 6.25. Small per trade, but it compounds fast for a high-frequency book.
FAQ3 reader questions · AEO-eligible
Common questions on what is stt.
What is the STT on options in India?
Since 1 October 2024, STT on the sale of options is 0.1% of the option premium, up from 0.0625%. Exercised options also attract STT on the settlement value.
Is STT charged on buying or selling?
It depends on the segment. Delivery equity is taxed on both buy and sell, while intraday equity, futures and options are taxed mainly on the sell side.
Can I claim STT back?
STT paid on trading is treated as a business expense if you report F&O or intraday as business income. For investors taxed under capital gains, STT is not separately deductible but its payment is what qualifies the gain for the concessional equity rates.
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