You as a taxpayer have the right to seek to minimise your tax liability on investment income. The Government of India imposed the Securities Transaction Tax (STT) in 2004 as a result of increased reports of tax avoidance. It's a new type of tax imposed on the purchase and selling of securities. So let’s understand what is STT in detail.
What is STT charges?
The security transaction tax is a tax on earned income you have generated from the trading of securities like stocks, options, and futures. Because security transaction tax has such a long name, we will refer to it as STT or STT tax from now on.
STT tax is a direct tax imposed and recovered by the central government on all domestic stock, option, and futures transactions. It was launched in 2004 as a better way to ease accounting profit reporting and tax collection in order to prevent tax avoidance. It contains aspects that are comparable to TDS (tax deducted at source), which is levied when a transaction occurs, such as when you sell or buy a stock.
Specifications of STT Charges:
STT is a straightforward direct tax that is easy to calculate and collect.
All sell transactions you execute in options and futures are subject to the STT charge.
Each future trade you take is recognised at the true traded price for STT purposes, whereas each option trade is valued at the premium.
A clearing member's STT tax is equal to the total of all STT taxes paid by trading members under him.
Securities that are subject to STT:
On several sorts of purchases you have done on India's domestic stock exchanges, a securities transaction tax is imposed. Following are the transactions that are permitted by the Securities Contract Act of 1956.
Shares, bonds, debentures, and other marketable securities that are traded on a stock exchange
Derivatives that are traded in the market.
If you receive units from any collective investment plan.
Government securities with the characteristics of equity
Securities rights or responsibilities
Mutual funds with a focus on equity trading
Guide to calculate STT charges:
Mr Jason is an experienced stock market investor in India. He invests in Tata Power by purchasing 2000 shares. Mr Jason buys Tata Power shares for Rs.60 per share and sells them for Rs.90 per share. The appropriate STT for intraday equity trading is 0.025 percent.
Therefore,
0.025%*90*2000 = Rs45 = SST
The SST for futures and options, on the other hand, is 0.01 percent. Mr Jason buys 5 lots of ABC futures at Rs.2000 and sells them at Rs.4000. There are 200 shares in each lot.
Therefore,
0.01%*4000*5*200 = Rs.400 = SST
You must have got an idea about what is STT.
Before you invest your trading profit in property, get it verified from NoBroker first. And if you are worried, then approach NoBroker buyer plans to seal the best deals. Read More: What is betterment charges? What is land tax? How to calculate stamp duty and registration charges? What is franking charges?
What is STT?
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2022-05-17T18:03:33+00:00 2022-05-17T18:03:35+00:00Comment
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