What is the Securities Transaction Tax?
The Securities Transaction Tax was introduced by Chapter VII of the Finance Act (No.2) Act, 2004. STT is a tax being levied on all transactions done on the stock exchanges. Securities Transaction Tax is applicable on purchase or sale of equity shares, derivatives, equity-oriented funds and equity-oriented mutual funds. How is STT applied? STT is applied as following (effective from June 1st, 2005): • For transactions in a recognised stock exchange in India: a) Purchase/Sale of equity shares, units of equity oriented mutual fund (delivery based) — 0.10% b) Sale of equity shares, units of equity oriented mutual fund (non-delivery based) — 0.02% c) Sale of derivative — 0.01% • Sale of unit of an equity oriented fund to the mutual fund — 0.2% What items fall under the category of ‘securities’? ‘Securities’ are defined under Section 2(h) of the Securities Contracts (Regulation) Act, 1956 (SCRA) to include: • Shares, scrips, stocks, bonds, debentures, debenture stock or other marketable
