What is the Securities Transaction Tax?

To stop this situation, the then Finance Minister P Chidambaram in the Union Budget 2004-05—introduced STT. Transactions in stock, index options and futures would also be subject to transaction tax. This tax is payable whether you buy or sell a share and gets added to the price of the stock at the time the transaction is made. Since brokers have to automatically add this tax to the transaction price, there is no way to avoid it.

The securities transaction tax (STT) was introduced in India a few years ago, to stop tax avoidance of capital gains tax. Earlier, many people usually didn’t declare their profits on the sale of stocks and avoided paying capital gains tax. The government could tax only those profits, which have been declared by people. To stop this situation, the then Finance Minister P Chidambaram in the Union Budget 2004-05—introduced STT. Transactions in stock, index options and futures would also be subject to transaction tax. This tax is payable whether you buy or sell a share and gets added to the price of the stock at the time the transaction is made. Since brokers have to automatically add this tax to the transaction price, there is no way to avoid it. The Finance Ministry has supported the introduction of the STT to simplify the tax regime on financial market transactions. According to the ministry, STT is a clean and efficient way of collecting taxes from financial markets. In the words, STT is a neat, efficient and easy-to-administer tax and it has the great advantage of virtually eliminating tax avoidance.

> STT -- STT was introduced in the Budget of 2004 and implemented in Oct 2004. The objective behind the levy is to mitigate tax evasion as the same is taxed at source. Stocks, futures, option, mutual funds and exchange traded funds come under the ambit of STT. --Securities Transaction Tax (STT) is a tax payable on the value of securities (excluding commodities and currency) transacted through a recognized stock exchange. The tax is not applicable on off-market transactions or on commodity or currency transactions --STT is levied on every purchase or sale of securities that are listed on the Indian stock exchanges. This would include shares, derivatives or equity-oriented mutual funds units -- STT is a kind of turnover tax --The STT applicable in the case of intraday transaction will be different from the one applicable in the case of delivery transaction. Likewise, the STT applicable in the case of buying a security will be different from the one applicable in the case of selling the security.

Hie Gunesh, STT is a kind of turnover tax where the investor has to pay a small tax on the total consideration paid or received in a share transaction. **Definition:** STT is a kind of turnover tax where the investor has to pay a small tax on the total consideration paid or received in a share transaction. **Description:** STT was introduced in the Budget of 2004 and implemented in Oct 2004. The objective behind the levy is to mitigate tax evasion as the same is taxed at source. Stocks, futures, option, mutual funds and exchange traded funds come under the ambit of STT. The STT applicable in the case of intraday transaction will be different from the one applicable in the case of delivery transaction. Likewise, the STT applicable in the case of buying a security will be different from the one applicable in the case of selling the security. STT will be applicable in the case of transaction that takes place in the exchanges. For availing the exemption in the case of long-term capital gain, the asset under consideration has to be subjected to STT.

STT :- **SECURITY TRANSACTION TAX** Securities Transaction Tax (STT) is the tax payable on the value of taxable securities transaction. STT was introduced in India by the 2004 budget and is applicable with effect from 1st October 2004. **Taxable securities transaction New rate from 01.06.2013** a Sale of an option in securities 0.17% b Sale of an option in securities, where option is exercised 0.125% c Sale of a futures in securities 0.01% THANKS....

The securities transaction tax (STT) was introduced in India a few years ago, to stop tax avoidance of capital gains tax. Earlier, many people usually didn’t declare their profits on the sale of stocks and avoided paying capital gains tax. The government could tax only those profits, which have been declared by people. To stop this situation, the then Finance Minister P Chidambaram in the Union Budget 2004-05—introduced STT. Transactions in stock, index options and futures would also be subject to transaction tax. This tax is payable whether you buy or sell a share and gets added to the price of the stock at the time the transaction is made. Since brokers have to automatically add this tax to the transaction price, there is no way to avoid it. The Finance Ministry has supported the introduction of the STT to simplify the tax regime on financial market transactions. According to the ministry, STT is a clean and efficient way of collecting taxes from financial markets. In the words, STT is a neat, efficient and easy-to-administer tax and it has the great advantage of virtually eliminating tax avoidance. STT is levied on every purchase or sale of securities that are listed on the Indian stock exchanges. This would include shares, derivatives or equity-oriented mutual funds units. The rate of tax that is deducted is determined by the central government, and it varies with different types of transactions and securities. STT is deducted at source by the broker or AMC, at the time of the transaction itself, the net result is that it pushes up the cost of the transaction done. Scope of STT According to the Securities Contracts (Regulation) Act, 1956, STT would be applicable on following securities. Shares, bonds, debentures, debenture stock or other marketable securities of a like nature in or of any incorporated company or other body corporate Derivatives Units or any other instrument issued by any collective investment scheme to the investors in such schemes Security receipt as defined in section 2(zg) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 Government securities of equity nature Rights or interest in securities Equity-oriented mutual funds STT is not applicable for any off-market transaction. STT rate Finance Minister P Chidambaram in the Union Budget 2013-14 has cut the STT (securities transaction tax) on equities and mutual fund units. STT reduction on ETF is expected to enhance returns with lower transaction costs. The STT charge on equity futures is cut from 0.17% to 0.1%. In the previous Budget, STT was slashed by 0.17% from 0.125% on cash delivery transactions. The STT charge on redemption of mutual funds or ETFs (exchange traded funds) at fund counters is reduced from 0.25% to 0.001%, while STT on sale of MFs or ETFs on stock exchanges is cut from 0.1% to 0.001% levied only on the seller.

**Securities Transaction Tax (STT)** is a tax payable in India on the value of securities (excluding commodities and currency) transacted through a recognized stock exchange. The tax is not applicable on off-market transactions or on commodity or currency transactions.