Securities Transaction Tax (STT)

The Securities Transaction Tax (STT) is an Indian levy imposed on trades of listed securities, such as shares, equity-based mutual fund units, and derivative contracts, executed through recognized stock exchanges. The tax is charged at the time of each transaction and is computed as a small percentage of the trade’s total value, payable by either the buyer or the seller depending on the type of security.

Example: When an investor purchases shares worth ₹1,00,000, an STT of 0.1% (₹100) may be added. The broker collects this amount from the investor and forwards it to the government. STT was implemented to increase transparency in capital market taxation and minimize tax avoidance, replacing the earlier method of manually monitoring taxable securities transactions.