1. What is Securities Transaction Tax (STT)?
Ans. Securities Transaction Tax or turnover tax, as is generally known, is a tax that is leviable on taxable securities transaction.
2. Which are the taxable securities transactions?
Ans. Taxable Securities Transactions are transactions involving
- Purchase or sale of (provided it is entered into at recognized stock exchanges):
- equity share in a Company or
- a derivative or
- a unit of an equity oriented fund - Sale of a unit of an equity oriented fund to the Mutual Fund itself.
3. How are taxable securities transactions valued for the purpose of levy of STT?
Ans. The value of transactions on which STT is levied is listed as under :
| Particulars of Transaction |
Value (Rs.) |
| Derivatives- Options in Securities |
Strike + Option Price Premium |
| Derivatives- Futures Futures |
Trading Price |
| Others |
Purchase or Sale Price, as applicable |
| Sr.No. |
Taxable Securities Transaction |
Rate |
Payable by |
| 1. |
Purchase of an equity share in a company or a unit of an equity oriented fund, where
(a) the transaction of such purchase is entered into in a recognized stock exchange; and
(b) the contract for the purchase of such share or unit is settled by the actual delivery or transfer of such share or unit. |
0.075% |
Purchaser |
| 2. |
Sale of an equity share in a company or a unit of an equity oriented fund, where
(a) the transaction of such sale is entered into in a recognized stock exchange; and
(b) the contract for the sale of such share or unit is settled by the actual delivery or transfer of such share or unit. |
0.075% |
Seller |
| 3. |
Sale of an equity share in a company or a unit of an equity oriented fund, where
(a) the transaction of such sale is entered into in a recognized stock exchange; and
(b) the contract for sale of such share or unit is settled otherwise than by the actual delivery or transfer of such share or unit. |
0.015% |
Seller |
| 4. |
Sale of a derivative, where the transaction of such sale is entered into in a recognized stock exchange. |
0.01% |
Seller |
| 5. |
Sale of a unit of an equity oriented fund to the Mutual Fund. |
0.15% |
Seller |
4. What are the rates applicable for levy of STT?
Ans. The rates of STT are as follows :
5. From which date is STT applicable?
Ans. STT is leviable on the taxable securities transactions with effect from 1st October, 2004 as per the notification issued by the Central Government.
6. Is surcharge leviable on STT?
Ans. The surcharge is not leviable on the STT.
7. On which taxes is education cess leviable? When is education cess leviable from? Is education cess leviable on STT?
Ans. Education Cess is leviable on all taxes, duties, etc. Education cess is to be levied from 1st April, 2004. No Education Cess is leviable on the STT.
8. Is STT applicable on "Open Offer"?
Ans. No. As explained above, STT is applicable on taxable securities transactions only. The purchase and sale transactions have to be entered on the recognized stock exchanges. As such, in case of "Open Offer" the STT is not leviable since the same are not entered on recognized stock exchanges. Hence, capital gains arising on such transactions will be charged to tax at normal rates applicable to capital gains. However, the long-term capital gains arising on sale of following equity shares are exempt from tax:
- equity share in a company which is a constituent of the BSE-500 Index of Mumbai Stock Exchange & such sale is entered in a recognized stock exchange; or
- an equity share in a company allotted through public issue on/after 1/03/2003 and listed on recognized stock exchange in India and the sale transaction is entered on a recognized stock exchange.
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