Securities Transaction Tax (STT) is a direct tax levied on the value of taxable securities traded on a recognised stock exchange in India. It was introduced by the Securities Transaction Tax Act, 2004 and is collected automatically by your stockbroker at the time of the trade, then deposited with the government. You never pay it separately — it is deducted on the spot and shown as a line item on your contract note. As of 2026, STT ranges from 0.001% on equity-oriented mutual fund units sold on an exchange to 0.15% on the premium of equity options sold, with the rate depending entirely on the segment you trade and whether you are on the buy or sell side.
This guide covers what STT is, the current 2026 rate table by segment, the Budget 2026 hike on futures and options effective 1 April 2026, how STT differs from brokerage and other contract-note charges, and how STT-paid trades unlock concessional capital-gains tax rates under the Income Tax Act.
What is Securities Transaction Tax?
STT is a transaction-based tax — it applies to the value of the trade, not to your profit. Whether you make money, lose money, or break even, STT is charged the moment a taxable transaction is executed on a recognised exchange such as the NSE or BSE. Because it is charged per transaction, frequent traders pay it far more often than long-term investors.
The key features of STT are:
- Collected by the broker: Your broker acts as the collection agent, deducts STT at the prescribed rate, and remits it to the Central Government. You see it deducted in the funds settlement, never as a separate payment.
- Applies only on recognised exchanges: Off-market transfers, gifts, and private transactions of unlisted shares (outside an IPO offer-for-sale) do not attract STT.
- Side-specific: Some segments charge STT on both the buy and sell legs (equity delivery), while others charge it only on the sell side (intraday, futures, options).
Because it is automatically deducted, many investors only notice STT when they read their contract note closely. Understanding it matters because it directly affects your break-even point and, more importantly, your eligibility for lower capital-gains tax rates.
STT rates in India 2026 — segment by segment
The table below shows the STT rates applicable across all major segments in 2026. Note the futures and options rates reflect the Budget 2026 hike effective 1 April 2026.
| Segment | STT Rate (2026) | Charged on |
|---|---|---|
| Equity delivery (buy and sell) | 0.1% | Both buy and sell, on transaction value |
| Equity intraday | 0.025% | Sell side only |
| Equity futures | 0.05% | Sell side only, on traded value |
| Equity options (premium) | 0.15% | Sell side only, on the option premium |
| Equity options (on exercise) | 0.125% | On the intrinsic value (in-the-money settlement) |
| Equity-oriented MF / ETF units sold on exchange | 0.001% | Sell side only |
| Sale of unlisted equity under an IPO (offer for sale) | 0.2% | Seller, on transaction value |
The most important takeaway: equity delivery is the only common segment that charges STT on both legs. For delivery trades you pay 0.1% when you buy and 0.1% when you sell. For intraday, futures, and options, STT is charged only when you sell (or square off).
The Budget 2026 F&O hike (effective 1 April 2026)
Budget 2026 raised STT on derivatives to discourage excessive retail speculation in the futures and options (F&O) segment. The changes were confirmed via the Finance Act provisions and NSE circulars:
- Equity futures: raised from 0.02% to 0.05% on the sell side. (For context, the rate was 0.0125% before 1 October 2024, then 0.02%, and is now 0.05%.)
- Equity options: the STT on the option premium (sell side) rose from 0.1% to 0.15%. (It was 0.0625% before 1 October 2024.)
Crucially, the delivery (0.1%), intraday (0.025%), and equity-oriented mutual fund (0.001%) rates were left UNCHANGED. The hike targets derivatives traders specifically. If you are a long-term equity investor buying and holding shares, your STT cost did not change in 2026.
How STT differs from other contract-note charges
STT is just one of several deductions on a trade. When you read a contract note from any broker — see our demat account charges comparison for a full breakdown — you will find STT sitting alongside brokerage, exchange transaction charges, the SEBI turnover fee, GST, and stamp duty. They are all separate, levied by different bodies, and calculated differently.
| Charge | Levied by / for | Typical basis |
|---|---|---|
| STT | Central Government (STT Act, 2004) | Fixed % of transaction value (per segment) |
| Brokerage | Your broker | Flat fee (e.g. ₹20/order) or % of turnover |
| Exchange transaction charge | NSE / BSE | % of turnover (varies by segment) |
| SEBI turnover fee | SEBI (regulator) | ₹10 per ₹1 crore of turnover (0.0001%) |
| GST (18%) | Government | 18% on (brokerage + exchange charge + SEBI fee) |
| Stamp duty | State governments | % of buy-side value (e.g. 0.015% delivery) |
A critical point that confuses many traders: GST at 18% is charged only on brokerage, the exchange transaction charge, and the SEBI fee — NOT on STT or stamp duty. STT and stamp duty are themselves statutory levies and are not subject to GST. So you never pay tax-on-tax for STT.
Stamp duty and STT are also distinct: stamp duty is a state levy charged on the buy side, while STT is a central levy charged per the segment rules above. For the depository-side costs you also pay on selling from your demat account, read our explainer on DP charges in your demat account.
Worked examples
Example 1: Delivery purchase and sale
Suppose you buy 100 shares of a company at ₹500 each (₹50,000) and later sell all 100 at ₹600 each (₹60,000). STT on delivery is 0.1% on both legs:
- STT on buy: 0.1% × ₹50,000 = ₹50
- STT on sell: 0.1% × ₹60,000 = ₹60
- Total STT: ₹110
This ₹110 is deducted automatically and shown on your two contract notes.
Example 2: Intraday trade
You buy and sell 200 shares the same day. The buy was ₹40,000 and the sell was ₹41,000. Intraday STT (0.025%) applies only to the sell side:
- STT on buy: ₹0 (no STT on intraday buy)
- STT on sell: 0.025% × ₹41,000 = ₹10.25
Example 3: Options sold (2026 rate)
You sell (write) an option and collect a premium of ₹20,000. Under the 2026 rate of 0.15% on the premium (sell side):
- STT: 0.15% × ₹20,000 = ₹30
Before 1 April 2026 this would have been 0.1% × ₹20,000 = ₹20. The hike adds ₹10 on this trade — small per trade, but meaningful for high-frequency derivatives traders.
STT and your income tax — the concessional rate link
The single biggest reason STT matters is its link to capital-gains tax. Under the Income Tax Act, 1961, gains on listed equity shares and equity-oriented mutual funds qualify for concessional tax rates only if STT has been paid on the transaction:
- Section 111A (Short-Term Capital Gains): STCG on STT-paid listed equity and equity MF units is taxed at a concessional flat rate (instead of being added to your slab income). The applicable STCG rate was revised in recent budgets — confirm the current rate when filing.
- Section 112A (Long-Term Capital Gains): LTCG on STT-paid listed equity above the prescribed annual exemption threshold is taxed at the concessional LTCG rate, again conditional on STT having been paid both at acquisition (where applicable) and at sale.
If STT has not been paid — for example on an off-market transfer of unlisted shares — these concessional rates generally do not apply, and the gain is taxed under the ordinary capital-gains provisions. This is why STT, though small, effectively buys you access to lower tax rates on equity gains.
Is STT itself tax-deductible?
For ordinary investors whose equity gains are taxed as capital gains, STT is generally not deductible from the sale consideration when computing capital gains — you cannot reduce your gain by the STT paid. However, traders who report their activity as business income (for example, F&O traders or active intraday traders treating trading as a business) can usually claim STT paid during the year as a deductible business expense under the normal business-income rules. The treatment hinges on whether your activity is classified as investment (capital gains) or business income — a distinction worth confirming with a tax professional.
If you are just starting out, our beginner's guide to investing in stocks walks through opening an account and placing your first trade, and you can compare the best demat accounts for 2026 or browse all demat account options to find a broker whose charges suit your trading style.
Frequently Asked Questions
What is Securities Transaction Tax (STT)?
STT is a direct tax levied on the value of taxable securities transactions executed on a recognised stock exchange in India, introduced by the Securities Transaction Tax Act, 2004. It is collected automatically by your broker at the time of the trade and deposited with the Central Government, so you never pay it separately.
What are the current STT rates in India for 2026?
For 2026: equity delivery is 0.1% on both buy and sell; intraday is 0.025% on the sell side; equity futures are 0.05% on the sell side; equity options are 0.15% on the sell-side premium (and 0.125% on intrinsic value on exercise); equity-oriented MF/ETF units sold on an exchange are 0.001%; and sale of unlisted equity under an IPO offer-for-sale is 0.2%.
Did STT increase in Budget 2026?
Yes, but only on derivatives. Effective 1 April 2026, STT on equity futures rose from 0.02% to 0.05% on the sell side, and STT on equity options rose from 0.1% to 0.15% on the premium (sell side). Delivery (0.1%), intraday (0.025%), and equity mutual fund (0.001%) rates were left unchanged.
How is STT different from brokerage and GST?
STT is a central-government statutory tax charged as a fixed percentage of transaction value per segment. Brokerage is your broker's own fee, exchange charges go to the NSE/BSE, and the SEBI turnover fee goes to the regulator. GST at 18% is charged only on brokerage plus exchange charges plus the SEBI fee — it is NOT charged on STT or on stamp duty.
Is STT charged on the buy side or the sell side?
It depends on the segment. Equity delivery charges STT on both the buy and the sell leg (0.1% each). Equity intraday, futures, and options charge STT only on the sell side. Equity-oriented mutual fund and ETF units sold on an exchange are charged only on the sell side.
Can I claim STT as a deduction on my taxes?
For ordinary investors whose equity gains are taxed as capital gains, STT is generally not deductible from the sale consideration. However, traders who report their activity as business income (such as active F&O or intraday traders) can usually claim STT paid as a deductible business expense. Crucially, paying STT is what unlocks the concessional capital-gains rates under Sections 111A (STCG) and 112A (LTCG) for listed equity.