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 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
STT rate
Deductions
So the next time, your broker or asset management company sends you your transaction bill or statement, remember that the extra bit you are paying over and above your transaction is nothing but the tax that has been levied. Whether it is purchase and sale of shares or mutual fund units, STT will stay and cannot be avoided. At the end of the year, you can ask your broker to give you a certificate of the STT that you have paid through the year. You can use this amount to deduct from your short term capital gains and get a tax credit.
Aug 10, 2022
Aug 10, 2022
Aug 10, 2022
Aug 10, 2022
Aug 10, 2022
Aug 10, 2022
Aug 10, 2022
Aug 10, 2022
Aug 10, 2022
Aug 10, 2022
Aug 10, 2022
Aug 10, 2022
Aug 10, 2022
Aug 10, 2022
Aug 10, 2022
The laws of the financial world are different from the physical world. You can have prolonged periods of time, when sanity takes a back seat and excesses happen.
R. Venkataraman Aug 20, 2021
Retail trading or day trading has exploded because of falling brokerage rates, democratization of information, higher transparency and mobile platforms.
R. Venkataraman Jun 15, 2021
My simple message for dear readers is, if you don’t have any desperate need for funds, then don’t do anything.
R. Venkataraman May 12, 2021
The blow up of a US hedge fund has resulted in WhatsApp university offering many courses on what went wrong with Bill Hwang and Archegos.
R. Venkataraman Apr 09, 2021
The expensive valuations have been sustained by strong rebound in corporate earnings which led to ~8% upgrade in FY22 Nifty EPS since October 2020.
R. Venkataraman Mar 26, 2021
We believe the interest rates are likely to have bottomed due to inflationary pressure, large government borrowings and normalizing credit growth. Hence rate sensitive sectors should be avoided in our view.
R. Venkataraman Feb 17, 2021
As markets make new highs, one gets more emails and messages, which highlight the accomplishments of traders who have found a formula for making money.
R. Venkataraman Jan 27, 2021
Data does not seem to convincingly prove that short periods of high returns are always followed by meagre returns. Only in 4 instances, we had negative returns in the subsequent year.
R. Venkataraman Jan 01, 2021
Since September end, Bankex is up 16% with large banks like ICICI Bank, Bandhan up 20-27%, Housing Finance Companies like Repco, LICHF, PNB Housing are up 50%-100% from their six-month lows.
R. Venkataraman Oct 13, 2020
Morgan Housel’s 'The Psychology of Money' explains in detail the role of human biases in investment decisions.
R. Venkataraman Sep 26, 2020
Per Order for ETF & Mutual Funds Brokerage
Per Order for Delivery, Intraday, F&O, Currency & Commodity