What Is STT and How Does It Affect Your Trades?

Every stock market trade has more than just a buy or sell price. Along with brokerage, exchange transaction charges, GST, and stamp duty, traders and investors also pay STT.

It may look like a small charge in the contract note, but it directly affects your total trading cost, especially if you trade frequently.

In this blog, you will learn what STT is, the calculation of STT charges, and whether it is refundable or not.

What Is STT?

It applies to certain transactions involving equity shares, futures, options, and equity-oriented mutual funds. STT is collected at the time of the trade and is usually shown separately in the broker’s contract note. It is called a transaction tax because it is charged when an eligible securities transaction is executed, not only when you make a profit.

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How is STT Levied in the Stock Market?

STT applies in the stock market as a mandatory, government-levied direct tax on the purchase and sale of securities. It is deducted by your broker regardless of whether you made a profit or a loss.

Here is how STT applies:

• You buy or sell an eligible security.
• The broker calculates STT based on the transaction type and applicable rate.
• The amount is shown in your contract note.
• The broker or exchange collects it.
• The collected tax is paid to the government.

How do STT Charges Vary for Each Transaction Type?

STT charges are the tax rates applied to different stock market transactions. The rate depends on the security type and whether the tax is charged on the buy side, sell side, or both.

Latest Securities Transaction Tax Rates (2026)

How Much STT Do You Pay on Equity Trades?

STT charges on equity depend on whether the trade is delivery-based or intraday. For equity delivery trades, STT is charged at 0.1% on both buy and sell transactions. For equity intraday trades, STT is charged only on the sell side at 0.025%.

For delivery trades, STT is charged differently because it applies to both buy and sell sides.

How Much STT Do You Pay on Futures Trades?

STT on futures is charged on the sell side of the futures transaction. It applies to equity futures traded on recognised stock exchanges. The current STT rate on equity futures is 0.02% on the sell side.

This amount is added to your trading charges and shown in the contract note.

How Much STT Do You Pay on Options Trades?

STT on options is charged differently depending on whether the option is sold or exercised. For normal options trades, STT is charged on the sell side based on the option premium. The current STT rate on equity options is 0.1% on the premium value when the option is sold.

If an option is exercised, STT may apply differently based on the settlement value or intrinsic value, as per applicable rules.

How Much STT Do You Pay on Mutual Fund Redemptions?

STT on mutual funds usually applies to the sale or redemption of equity-oriented mutual fund units. It is generally not charged on debt mutual funds. For equity-oriented mutual fund units, STT is charged at 0.001% on redemption or sale.

This charge is usually deducted at the time of redemption.

Who Pays STT, Buyer or Seller?

For equity and exercised options, both the buyer and the seller pay STT, while for equity intraday, futures, and options, only the seller pays it.

Is STT Refundable?

No, STT is not refundable. It is a transaction tax collected at the time of eligible stock market trades.

However, if you are a trader and your income is treated as business income, you may claim STT as a business expense when filing your income tax return, subject to applicable tax rules. For investors, STT is usually included in the transaction cost and not refunded separately.

What If STT Is Not Paid?

For exchange-traded securities, STT is usually collected automatically by the broker or exchange, so investors normally do not pay it separately.

What Are the Benefits of Using STT?

STT makes securities transaction taxation more transparent by collecting it directly at the transaction level. Here are the key benefits of STT:

• Automatic collection: STT is deducted during eligible transactions.
• Clear contract note entry: Traders can see STT separately in their broker contract note.
• Reduced tax evasion: Since it is collected through exchanges and brokers, reporting becomes more structured.
• Simple calculation: STT is based on transaction type and value.

STT vs Brokerage: What Is the Difference?

STT is a government tax, while brokerage is a fee charged by your broker for executing trades. Both add to your total trading cost, but they are different charges.

STT vs Capital Gains Tax: What Is the Difference?

STT is charged on the transaction value, while capital gains tax is charged on profit from selling an investment.

How to Check STT in Contract Note?

You can check STT in your broker’s contract note under the statutory charges section. It is usually listed separately as STT or Securities Transaction Tax.

Final Thoughts

STT is a mandatory tax on eligible stock market transactions in India. This amount may look small, but it adds to the total cost of every eligible trade. So, always check the complete cost of a trade, not just the brokerage fee.

STT in the Stock Market : FAQs