Stock exchange turnover tax

A stock-exchange turnover tax is levied on the total value of trades carried out on a stock exchange, whether they involve purchases or sales. The tax is based on the transaction amount rather than any gain or loss from the trade. In India, this levy is known as the Securities Transaction Tax (STT). It applies to trades in instruments such as equities, equity-oriented mutual funds, exchange-traded funds, and derivative contracts executed through registered exchanges.

Example: If you dispose of 100 shares at ₹500 each, the trade value is ₹50,000. With an STT rate of 0.1% on equity sales, the tax due would be ₹50, which the broker collects and remits to the government.