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How Securities Transaction Tax (STT) is Calculated on Sale Purchase of Shares?

Indian Govt is very sharp as they let you skip giving tax on your equity holdings in the long run but it makes sure that you pay through your nose while making your online transactions for buying and selling the shares.

The exemption provided to long term capital gains from taxation led to the introduction of a new tax for equity shares and equity-oriented mutual funds, called the securities transaction tax (STT).

STT is applicable on:

  • Purchase and sale of equity shares on the stock exchange @ 0.10% for deliver based transactions and 0.025% by seller in case of an intra-day transaction.
  • Sale of an option in securities @ 0.017% payable by the seller.
  • In case of an option in securities, where option is exercised @ 0.125 payable by the purchaser and 0.017% by seller on premium value.
  • Sale of futures in securities @ 0.01% payable by the seller.
  • Redemption and switch of units from equity-oriented schemes @ 0.001%.
  • STT is applicable irrespective of the tax status of the investor. It is computed on the amount of redemption or sales value and is reduced from the redemption or sales proceeds paid to the investor. STT is paid to the government and the redemption or sale proceeds are paid to the investor.
So while executing your trade you have to not only care for the brokerage charges but also for the STT charges as these are charges not visible upfront. Check the best broker in India here.

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