Securities Transaction Tax is a tax payable in India on the value of securities transacted through a recognized stock exchange. As of 2016, it is 0.1% for delivery based equity trading.
STT does not apply to off-market transactions or on commodity or currency transactions. The original tax rate was set at 0.125% for a delivery-based equity transaction and 0.025% on an INTER-day transaction. The rate was set at 0.017% on all Futures and Options transactions.
STT was originally introduced in 2004 by the then Finance Minister, P. Chidambaram to stop tax avoidance of capital gains tax. The government reduced this tax in the 2013 budget after protests for years by the brokers and the trading community. The revised STT for delivery-based equity trading is 0.1% on the turnover. For Futures, the tax has been reduced to 0.01% on the sell-side only. For Equity Options, the STT has been reduced to 0.05% on the sell side of the premium amount. The rest of the tax structure remains as is. STT is a direct tax.
The Government announced on 24 March 2023, that STT will increase by 25% effective 01 April 2023. From Wikipedia
