{"id":25637825,"date":"2026-02-06T11:20:57","date_gmt":"2026-02-06T05:50:57","guid":{"rendered":"https:\/\/entri.app\/blog\/?p=25637825"},"modified":"2026-02-06T12:44:50","modified_gmt":"2026-02-06T07:14:50","slug":"what-is-securities-transaction-tax","status":"publish","type":"post","link":"https:\/\/entri.app\/blog\/what-is-securities-transaction-tax\/","title":{"rendered":"What is Securities Transaction Tax (STT)?"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_79_2 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69ddf82c894ca\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69ddf82c894ca\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/entri.app\/blog\/what-is-securities-transaction-tax\/#Introduction\" >Introduction<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/entri.app\/blog\/what-is-securities-transaction-tax\/#What_is_Securities_Transaction_Tax_STT\" >What is Securities Transaction Tax (STT)?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/entri.app\/blog\/what-is-securities-transaction-tax\/#Reason_for_Introducing_STT_in_India\" >Reason for Introducing STT in India<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/entri.app\/blog\/what-is-securities-transaction-tax\/#Objectives_of_Securities_Transaction_Tax\" >Objectives of Securities Transaction Tax<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/entri.app\/blog\/what-is-securities-transaction-tax\/#Who_Pays_Securities_Transaction_Tax\" >Who Pays Securities Transaction Tax?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/entri.app\/blog\/what-is-securities-transaction-tax\/#On_Which_Transactions_is_STT_Applicable\" >On Which Transactions is STT Applicable?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/entri.app\/blog\/what-is-securities-transaction-tax\/#STT_Rates_in_India\" >STT Rates in India<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/entri.app\/blog\/what-is-securities-transaction-tax\/#How_is_STT_Calculated\" >How is STT Calculated?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/entri.app\/blog\/what-is-securities-transaction-tax\/#How_STT_Works_in_the_Stock_Market\" >How STT Works in the Stock Market?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/entri.app\/blog\/what-is-securities-transaction-tax\/#Impact_of_STT_on_Investors\" >Impact of STT on Investors<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/entri.app\/blog\/what-is-securities-transaction-tax\/#Impact_of_STT_on_Traders\" >Impact of STT on Traders<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/entri.app\/blog\/what-is-securities-transaction-tax\/#STT_and_Income_Tax_Treatment\" >STT and Income Tax Treatment<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/entri.app\/blog\/what-is-securities-transaction-tax\/#Advantages_of_Securities_Transaction_Tax\" >Advantages of Securities Transaction Tax<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/entri.app\/blog\/what-is-securities-transaction-tax\/#Disadvantages_of_Securities_Transaction_Tax\" >Disadvantages of Securities Transaction Tax<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/entri.app\/blog\/what-is-securities-transaction-tax\/#STT_vs_Capital_Gains_Tax\" >STT vs Capital Gains Tax<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-16\" href=\"https:\/\/entri.app\/blog\/what-is-securities-transaction-tax\/#How_to_Check_STT_Charged_by_Your_Broker\" >How to Check STT Charged by Your Broker<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-17\" href=\"https:\/\/entri.app\/blog\/what-is-securities-transaction-tax\/#Is_STT_Refundable\" >Is STT Refundable?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-18\" href=\"https:\/\/entri.app\/blog\/what-is-securities-transaction-tax\/#Key_Takeaways\" >Key Takeaways<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-19\" href=\"https:\/\/entri.app\/blog\/what-is-securities-transaction-tax\/#Parting_Words\" >Parting Words<\/a><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"Introduction\"><\/span><strong>Introduction<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>If you invest or trade in the Indian stock market, you may have noticed a small charge called STT in your contract note. Many investors see this deduction but are not fully sure what it means. Understanding taxes related to investments is an imperative because they directly affect your returns.<\/p>\n<p>In this blog, we will delve deep into <strong>what is securities transaction tax (STT)<\/strong>. Once you read the entire article, you will understand its meaning, rates, how it works, and how it impacts investors and traders in India. Whether you are a beginner or a regular market participant, this guide will help you clearly understand STT.<\/p>\n<p style=\"text-align: center;\"><strong><a class=\"in-cell-link\" href=\"https:\/\/entri.app\/course\/stock-market-course\/?utm_source=stock-marketing&amp;utm_medium=blog_referral&amp;utm_campaign=how-to-file-income-tax-return-on-your-own\" target=\"_blank\" rel=\"noopener\">Start investing like a pro. Enroll in our Stock Market course!<\/a><\/strong><\/p>\n<h2><span class=\"ez-toc-section\" id=\"What_is_Securities_Transaction_Tax_STT\"><\/span><strong>What is Securities Transaction Tax (STT)?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-25637828 \" src=\"https:\/\/entri.app\/blog\/wp-content\/uploads\/2026\/02\/14240.webp\" alt=\"Stock Market\" width=\"500\" height=\"333\" srcset=\"https:\/\/entri.app\/blog\/wp-content\/uploads\/2026\/02\/14240.webp 1500w, https:\/\/entri.app\/blog\/wp-content\/uploads\/2026\/02\/14240-300x200.webp 300w, https:\/\/entri.app\/blog\/wp-content\/uploads\/2026\/02\/14240-1024x683.webp 1024w, https:\/\/entri.app\/blog\/wp-content\/uploads\/2026\/02\/14240-768x512.webp 768w, https:\/\/entri.app\/blog\/wp-content\/uploads\/2026\/02\/14240-150x100.webp 150w, https:\/\/entri.app\/blog\/wp-content\/uploads\/2026\/02\/14240-750x500.webp 750w, https:\/\/entri.app\/blog\/wp-content\/uploads\/2026\/02\/14240-1140x760.webp 1140w\" sizes=\"auto, (max-width: 500px) 100vw, 500px\" \/><\/p>\n<p>Securities Transaction Tax, popularly known as STT, is a direct tax levied by the Indian government on the purchase or sale of securities listed on recognised stock exchanges in India.<\/p>\n<p>In simple words, <strong>what is securities transaction tax (STT)<\/strong>? It is a tax that you pay when you buy or sell shares, derivatives, or certain other securities through the stock exchange. The tax is automatically deducted by your broker at the time of the transaction and passed on to the government.<\/p>\n<p>STT applies only to transactions done on recognised stock exchanges such as NSE and BSE. It does not apply to off-market transactions.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Reason_for_Introducing_STT_in_India\"><\/span><strong>Reason for Introducing STT in India<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>The Securities Transaction Tax was introduced by the Indian government in 2004. The main objective was to create a simple and transparent way to collect tax from stock market transactions.<\/p>\n<p>Before STT, tracking profits from trading and investments was difficult, and tax evasion was common. STT made tax collection easier because it is collected at the time of the transaction itself.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Objectives_of_Securities_Transaction_Tax\"><\/span><strong>Objectives of Securities Transaction Tax<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>The key objectives behind introducing STT include:<\/p>\n<ul>\n<li>Ensuring easy and efficient tax collection<\/li>\n<li>Reducing tax evasion in capital market transactions<\/li>\n<li>Bringing transparency to stock market trades<\/li>\n<li>Compensating for lower long-term capital gains tax (earlier exempt)<\/li>\n<\/ul>\n<p>By charging a small tax on every transaction, the government ensures steady revenue with no heavy burden on investors.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Who_Pays_Securities_Transaction_Tax\"><\/span><strong>Who Pays Securities Transaction Tax?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>STT is paid by:<\/p>\n<ul>\n<li>Investors buying or selling equity shares<\/li>\n<li>Traders doing intraday trades<\/li>\n<li>Participants trading in futures and options<\/li>\n<li>Investors redeeming equity-oriented mutual funds<\/li>\n<\/ul>\n<p>Although the broker collects STT, the actual burden falls on the buyer or seller depending on the type of transaction.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"On_Which_Transactions_is_STT_Applicable\"><\/span><strong>On Which Transactions is STT Applicable?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-25637829 \" src=\"https:\/\/entri.app\/blog\/wp-content\/uploads\/2026\/02\/13404486_5230663-scaled.webp\" alt=\"Stock Market\" width=\"500\" height=\"333\" srcset=\"https:\/\/entri.app\/blog\/wp-content\/uploads\/2026\/02\/13404486_5230663-scaled.webp 2560w, https:\/\/entri.app\/blog\/wp-content\/uploads\/2026\/02\/13404486_5230663-300x200.webp 300w, https:\/\/entri.app\/blog\/wp-content\/uploads\/2026\/02\/13404486_5230663-1024x683.webp 1024w, https:\/\/entri.app\/blog\/wp-content\/uploads\/2026\/02\/13404486_5230663-768x512.webp 768w, https:\/\/entri.app\/blog\/wp-content\/uploads\/2026\/02\/13404486_5230663-1536x1024.webp 1536w, https:\/\/entri.app\/blog\/wp-content\/uploads\/2026\/02\/13404486_5230663-2048x1365.webp 2048w, https:\/\/entri.app\/blog\/wp-content\/uploads\/2026\/02\/13404486_5230663-150x100.webp 150w, https:\/\/entri.app\/blog\/wp-content\/uploads\/2026\/02\/13404486_5230663-750x500.webp 750w, https:\/\/entri.app\/blog\/wp-content\/uploads\/2026\/02\/13404486_5230663-1140x760.webp 1140w\" sizes=\"auto, (max-width: 500px) 100vw, 500px\" \/><\/p>\n<p>STT is applicable on the following securities traded on recognised stock exchanges:<\/p>\n<ul>\n<li>Equity shares<\/li>\n<li>Equity-oriented mutual funds<\/li>\n<li>Futures and options contracts<\/li>\n<li>Units of equity-oriented funds<\/li>\n<\/ul>\n<p>Securities Transaction Tax is not applicable to:<\/p>\n<ul>\n<li>Bonds and debentures (generally)<\/li>\n<li>Government securities<\/li>\n<li>Commodities traded on commodity exchanges<\/li>\n<li>Currency derivatives<\/li>\n<\/ul>\n<table width=\"468\">\n<tbody>\n<tr>\n<td colspan=\"2\"><strong>Gain Financial Literacy in your Mother Tongue<\/strong><\/td>\n<\/tr>\n<tr>\n<td><strong><a href=\"https:\/\/entri.app\/course\/stock-market-course-in-malayalam\/\" target=\"_blank\" rel=\"noopener\">Stock Market Course in Malayalam<\/a><\/strong><\/td>\n<td><strong><a href=\"https:\/\/entri.app\/course\/mutual-funds-course-in-kerala\/\" target=\"_blank\" rel=\"noopener\">Mutual Funds Course in Malayalam<\/a><\/strong><\/td>\n<\/tr>\n<tr>\n<td><strong><a href=\"https:\/\/entri.app\/course\/stock-market-course-in-tamil\/\" target=\"_blank\" rel=\"noopener\">Stock Market Course in Tamil<\/a><\/strong><\/td>\n<td><strong><a href=\"https:\/\/entri.app\/course\/mutual-funds-course-in-tamil\/\" target=\"_blank\" rel=\"noopener\">Mutual Funds Course in Tamil<\/a><\/strong><\/td>\n<\/tr>\n<tr>\n<td><strong><a href=\"https:\/\/entri.app\/course\/stock-market-course\/\" target=\"_blank\" rel=\"noopener\">Stock Market Course<\/a><\/strong><\/td>\n<td><a href=\"https:\/\/entri.app\/course\/mutual-funds-course\/\" target=\"_blank\" rel=\"noopener\"><strong>Mutual Funds Course<\/strong><\/a><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<h2><span class=\"ez-toc-section\" id=\"STT_Rates_in_India\"><\/span><strong>STT Rates in India<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>The rate of STT depends on the type of security and the nature of the transaction. The rates are small but vary across delivery, intraday, and derivatives trades.<\/p>\n<h3><strong>Common STT Rates (Indicative)<\/strong><\/h3>\n<ul>\n<li><strong>Equity delivery (buy and sell):<\/strong> Charged on both sides<\/li>\n<li><strong>Equity intraday:<\/strong> Charged only on the sell side<\/li>\n<li><strong>Futures:<\/strong> Charged on the sell side<\/li>\n<li><strong>Options:<\/strong> Charged on premium value (sell side)<\/li>\n<li><strong>Mutual fund redemption:<\/strong> Charged on redemption value<\/li>\n<\/ul>\n<p>It is the government that decides these rates and they may change from time to time.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"How_is_STT_Calculated\"><\/span><strong>How is STT Calculated?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-25637832 \" src=\"https:\/\/entri.app\/blog\/wp-content\/uploads\/2026\/02\/5673754_53390-scaled.webp\" alt=\"Stock Market\" width=\"500\" height=\"401\" srcset=\"https:\/\/entri.app\/blog\/wp-content\/uploads\/2026\/02\/5673754_53390-scaled.webp 2560w, https:\/\/entri.app\/blog\/wp-content\/uploads\/2026\/02\/5673754_53390-300x241.webp 300w, https:\/\/entri.app\/blog\/wp-content\/uploads\/2026\/02\/5673754_53390-1024x821.webp 1024w, https:\/\/entri.app\/blog\/wp-content\/uploads\/2026\/02\/5673754_53390-768x616.webp 768w, https:\/\/entri.app\/blog\/wp-content\/uploads\/2026\/02\/5673754_53390-1536x1232.webp 1536w, https:\/\/entri.app\/blog\/wp-content\/uploads\/2026\/02\/5673754_53390-2048x1643.webp 2048w, https:\/\/entri.app\/blog\/wp-content\/uploads\/2026\/02\/5673754_53390-150x120.webp 150w, https:\/\/entri.app\/blog\/wp-content\/uploads\/2026\/02\/5673754_53390-750x602.webp 750w, https:\/\/entri.app\/blog\/wp-content\/uploads\/2026\/02\/5673754_53390-1140x914.webp 1140w\" sizes=\"auto, (max-width: 500px) 100vw, 500px\" \/><\/p>\n<p>STT is calculated as a percentage of the transaction value.<\/p>\n<p><strong>For example:<\/strong> Assume that you are buying shares worth \u20b91,00,000. If the STT rate is 0.1%, the STT charged will be \u20b9100.Your broker automatically calculates and deducts this amount and there is no need to pay it separately.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"How_STT_Works_in_the_Stock_Market\"><\/span><strong>How STT Works in the Stock Market?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>When you place a buy or sell order through your trading account, the exchange executes the trade. At the same time:<\/p>\n<ol>\n<li>STT is calculated on the transaction value<\/li>\n<li>The broker deducts STT from your account<\/li>\n<li>The broker deposits the collected STT with the government<\/li>\n<\/ol>\n<p>This entire process is seamless and happens in the background.<\/p>\n<h3><strong>STT on Equity Delivery Trades<\/strong><\/h3>\n<p>Equity delivery trades are those where shares are bought and held in a demat account.<\/p>\n<ul>\n<li>STT is charged on both buy and sell transactions<\/li>\n<li>The rate is relatively higher compared to intraday trades<\/li>\n<li>It increases the overall cost of long-term investing<\/li>\n<\/ul>\n<p>That said, for long-term investors, the impact of STT is usually small compared to market gains.<\/p>\n<h3><strong>STT on Intraday Trades<\/strong><\/h3>\n<p>Intraday trading is all about buying and selling shares on the same day.<\/p>\n<ul>\n<li>STT is charged only on the sell side<\/li>\n<li>The rate is lower than delivery trades<\/li>\n<li>It affects frequent traders more due to high turnover<\/li>\n<\/ul>\n<p>For active traders, STT can add up over time and reduce net profits.<\/p>\n<h3><strong>STT on Futures and Options (F&amp;O)<\/strong><\/h3>\n<p>STT also applies to derivatives trading:<\/p>\n<h4><strong>Futures<\/strong><\/h4>\n<ul>\n<li>Charged on the sell side<\/li>\n<li>Calculated on the traded value<\/li>\n<\/ul>\n<h4><strong>Options<\/strong><\/h4>\n<ul>\n<li>Charged on the sell side<\/li>\n<li>Calculated on the option premium<\/li>\n<\/ul>\n<p>Derivatives traders should factor STT into their trading costs, especially if they trade frequently.<\/p>\n<h3><strong>STT on Mutual Funds<\/strong><\/h3>\n<p>STT applies only to equity-oriented mutual funds.<\/p>\n<ul>\n<li>Charged at the time of redemption or sale<\/li>\n<li>Not charged at the time of purchase<\/li>\n<li>Debt mutual funds do not attract STT<\/li>\n<\/ul>\n<p>This tax slightly reduces the redemption amount received by investors.<\/p>\n<h3><strong>STT on Bonds and Government Securities<\/strong><\/h3>\n<p>Generally, STT is not applicable to:<\/p>\n<ul>\n<li>Government bonds<\/li>\n<li>Treasury bills<\/li>\n<li>Most debt instruments<\/li>\n<\/ul>\n<p>This makes debt investments slightly more tax-efficient in terms of transaction taxes.<\/p>\n<div class=\"lead-gen-block\"><a href=\"https:\/\/entri.app\/blog\/wp-content\/uploads\/2023\/03\/Stock-Market-360_Pdf-1.pdf\" data-url=\"https:\/\/entri.app\/blog\/wp-content\/uploads\/2023\/03\/Stock-Market-360_Pdf-1.pdf\" class=\"lead-pdf-download\" data-id=\"25556854\">\n<p style=\"text-align: center;\"><button class=\"btn btn-default\">free download Stock market course roadmap<\/button><\/p>\n<\/a><\/div>\n<h2><span class=\"ez-toc-section\" id=\"Impact_of_STT_on_Investors\"><\/span><strong>Impact of STT on Investors<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>For long-term investors:<\/p>\n<ul>\n<li>STT is a small one-time cost<\/li>\n<li>It slightly reduces overall returns<\/li>\n<li>The impact is minimal for buy-and-hold strategies<\/li>\n<\/ul>\n<p>Understanding <strong>what is securities transaction tax (STT)<\/strong> helps investors estimate their net investment returns in a better manner.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Impact_of_STT_on_Traders\"><\/span><strong>Impact of STT on Traders<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>For traders:<\/p>\n<ul>\n<li>STT increases transaction costs<\/li>\n<li>High-frequency trading turns out to be more expensive<\/li>\n<li>Profit margins may reduce<\/li>\n<\/ul>\n<p>Active traders should always include STT while calculating breakeven points.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"STT_and_Income_Tax_Treatment\"><\/span><strong>STT and Income Tax Treatment<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-25637834 \" src=\"https:\/\/entri.app\/blog\/wp-content\/uploads\/2026\/02\/2184.webp\" alt=\"Stock Market\" width=\"500\" height=\"333\" srcset=\"https:\/\/entri.app\/blog\/wp-content\/uploads\/2026\/02\/2184.webp 1500w, https:\/\/entri.app\/blog\/wp-content\/uploads\/2026\/02\/2184-300x200.webp 300w, https:\/\/entri.app\/blog\/wp-content\/uploads\/2026\/02\/2184-1024x683.webp 1024w, https:\/\/entri.app\/blog\/wp-content\/uploads\/2026\/02\/2184-768x512.webp 768w, https:\/\/entri.app\/blog\/wp-content\/uploads\/2026\/02\/2184-150x100.webp 150w, https:\/\/entri.app\/blog\/wp-content\/uploads\/2026\/02\/2184-750x500.webp 750w, https:\/\/entri.app\/blog\/wp-content\/uploads\/2026\/02\/2184-1140x760.webp 1140w\" sizes=\"auto, (max-width: 500px) 100vw, 500px\" \/><\/p>\n<p>STT has a special treatment under income tax laws:<\/p>\n<ul>\n<li>STT paid is <strong>not allowed as a deduction<\/strong> for capital gains<\/li>\n<li>However, it can be claimed as a business expense by traders who show trading income as business income<\/li>\n<\/ul>\n<p>This distinction is important while filing income tax returns.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Advantages_of_Securities_Transaction_Tax\"><\/span><strong>Advantages of Securities Transaction Tax<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Some key benefits of STT are:<\/p>\n<ul>\n<li>Simple and transparent tax system<\/li>\n<li>Easy collection by the government<\/li>\n<li>Reduced chances of tax evasion<\/li>\n<li>Lower compliance burden on investors<\/li>\n<\/ul>\n<p>STT has helped streamline taxation in capital markets.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Disadvantages_of_Securities_Transaction_Tax\"><\/span><strong>Disadvantages of Securities Transaction Tax<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Despite its benefits, STT has some drawbacks:<\/p>\n<ul>\n<li>Increases trading costs<\/li>\n<li>Affects market liquidity<\/li>\n<li>Impacts small and frequent traders more<\/li>\n<li>Paid regardless of profit or loss<\/li>\n<\/ul>\n<p>Because STT is charged on every transaction, even loss-making trades attract tax.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"STT_vs_Capital_Gains_Tax\"><\/span><strong>STT vs Capital Gains Tax<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>STT and capital gains tax are different:<\/p>\n<ul>\n<li><strong>STT:<\/strong> Charged at the time of transaction<\/li>\n<li><strong>Capital gains tax:<\/strong> Charged on profits earned<\/li>\n<\/ul>\n<p>Both taxes apply independently. Paying STT does not exempt you from capital gains tax.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"How_to_Check_STT_Charged_by_Your_Broker\"><\/span><strong>How to Check STT Charged by Your Broker<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>You can check STT details in:<\/p>\n<ul>\n<li>Contract note<\/li>\n<li>Trade summary<\/li>\n<li>Ledger statement<\/li>\n<\/ul>\n<p>Brokers clearly mention STT as a separate line item along with other charges.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Is_STT_Refundable\"><\/span><strong>Is STT Refundable?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>STT is not refundable in most cases. Once paid, it cannot be claimed back, even if you incur a loss. Due to this reason, it is absolutely essential to understand <strong>what is securities transaction tax (STT)<\/strong> before actively trading.<\/p>\n<p style=\"text-align: center;\"><strong><a class=\"in-cell-link\" href=\"https:\/\/entri.app\/course\/stock-market-course\/?utm_source=stock-marketing&amp;utm_medium=blog_referral&amp;utm_campaign=how-to-file-income-tax-return-on-your-own\" target=\"_blank\" rel=\"noopener\">Start investing like a pro. Enroll in our Stock Market course!<\/a><\/strong><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Key_Takeaways\"><\/span><strong>Key Takeaways<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<ul>\n<li>Securities Transaction Tax is a direct tax on stock market transactions<\/li>\n<li>It is charged on equities, derivatives, and equity mutual funds<\/li>\n<li>Rates vary based on transaction type<\/li>\n<li>STT is automatically deducted by brokers<\/li>\n<li>It increases trading and investment costs<\/li>\n<li>Long-term investors feel less impact compared to traders<\/li>\n<\/ul>\n<p>Understanding STT helps you make better financial and trading decisions.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Parting_Words\"><\/span><strong>Parting Words<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Now that you have gained more knowledge about what is securities transaction tax (STT), are you keen to invest in stock markets? It\u2019s pretty simple. All you have to do is to learn stock markets from an expert mentor.<\/p>\n<p>Entri Finacademy is one such trusted finance education platform with a team of highly experienced mentors. The courses at Entri are designed in such a way that even an absolute beginner can learn stock markets right from the scratch to the advanced levels. Moreover, you also have the option to learn stock market courses in several regional languages including Tamil and Malayalam. Last but not least, with features such as exclusive doubt clearance sessions and practical trading support, Entri Finacademy is the best institution to kickstart your stock market journey. To learn more about Entri\u2019s stock market courses, click <a href=\"https:\/\/courses.entri.app\/finacademy-malayalam-courses\/?utm_source=pay_per_click_ads&amp;utm_medium=google_search_ads&amp;utm_campaign=kl_stockmarket_search_30_11_24&amp;utm_content=Brand_Keywords&amp;gad_source=1&amp;gad_campaignid=21970161998&amp;gbraid=0AAAAACXBHx8llkVugSLkJmK5Ae9VwLiQa&amp;gclid=CjwKCAiA1obMBhAbEiwAsUBbIhw7ZnSEYIvQtx0vGCJdQQ-h5Ww6u-PD3rKUts3V-La9y4qt3nRAWBoC3FgQAvD_BwE\" target=\"_blank\" rel=\"noopener\">here<\/a>.<\/p>\n<div class=\"alert alert-warning\"><strong>Disclaimer:<\/strong>\u00a0The information provided in this article is for general informational purposes only and is not intended as investment advice, financial guidance, or an offer or solicitation to buy or sell any securities. Readers should conduct their own research or consult a qualified financial advisor before making any investment decisions. The author(s) and the publisher disclaim any liability for any loss or damage arising directly or indirectly from the use of or reliance on the information provided herein.<\/div>\n<table>\n<tbody>\n<tr>\n<th style=\"text-align: center;\" colspan=\"2\">RELATED LINKS<\/th>\n<\/tr>\n<tr>\n<td style=\"text-align: center;\"><strong><a href=\"https:\/\/entri.app\/blog\/understanding-short-term-capital-gain-tax\/\" target=\"_blank\" rel=\"noopener noreferrer\">Understanding Short Term Capital Gain Tax<\/a><\/strong><\/td>\n<td style=\"text-align: center;\"><strong><a href=\"https:\/\/entri.app\/blog\/long-term-capital-gain-tax-on-shares\/\" target=\"_blank\" rel=\"noopener noreferrer\">Long Term Capital Gain Tax on Shares<\/a><\/strong><\/td>\n<\/tr>\n<tr>\n<td style=\"text-align: center;\"><strong><a href=\"https:\/\/entri.app\/blog\/can-investing-in-stocks-help-you-save-taxes\/\" target=\"_blank\" rel=\"noopener noreferrer\">Can Investing in Stocks Help You Save Taxes in India? (Complete Guide)<\/a><\/strong><\/td>\n<td style=\"text-align: center;\"><strong><a href=\"https:\/\/entri.app\/blog\/insurance-tax-saving-india-guide\/\" target=\"_blank\" rel=\"noopener noreferrer\">Can Investing in Insurance Help You Save Taxes in India?<\/a><\/strong><\/td>\n<\/tr>\n<tr>\n<td style=\"text-align: center;\"><strong><a href=\"https:\/\/entri.app\/blog\/mutual-fund-tax-saving\/\" target=\"_blank\" rel=\"noopener noreferrer\">Can Investing in Mutual Fund Help You Save Taxes in India? (Complete Guide)<\/a><\/strong><\/td>\n<td style=\"text-align: center;\"><strong><a href=\"https:\/\/entri.app\/blog\/how-much-tax-should-you-pay-for-mutual-funds\/\" target=\"_blank\" rel=\"noopener noreferrer\">How Much Tax Should You Pay for Mutual Funds?<\/a><\/strong><\/td>\n<\/tr>\n<tr>\n<td style=\"text-align: center;\"><strong><a href=\"https:\/\/entri.app\/blog\/gst-on-share-trading\/\" target=\"_blank\" rel=\"noopener noreferrer\">GST on Share Trading<\/a><\/strong><\/td>\n<td style=\"text-align: center;\"><strong><a href=\"https:\/\/entri.app\/blog\/what-to-do-if-i-get-income-tax-notice\/\" target=\"_blank\" rel=\"noopener noreferrer\">What to do if I get income tax notice?<\/a><\/strong><\/td>\n<\/tr>\n<tr>\n<td style=\"text-align: center;\"><strong><a href=\"https:\/\/entri.app\/blog\/reasons-for-income-tax-notice\/\" target=\"_blank\" rel=\"noopener noreferrer\">Reasons for income tax notice<\/a><\/strong><\/td>\n<td style=\"text-align: center;\"><strong><a href=\"https:\/\/entri.app\/blog\/how-to-avoid-income-tax-notice\/\" target=\"_blank\" rel=\"noopener noreferrer\">How to avoid income tax notice<\/a><\/strong><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<div class=\"modal\" id=\"modal25556854\"><div class=\"modal-content\"><span class=\"close-button\">&times;<\/span>\n\n<div class=\"wpcf7 no-js\" id=\"wpcf7-f25556854-o1\" lang=\"en-US\" dir=\"ltr\" data-wpcf7-id=\"25556854\">\n<div class=\"screen-reader-response\"><p role=\"status\" aria-live=\"polite\" aria-atomic=\"true\"><\/p> <ul><\/ul><\/div>\n<form action=\"\/blog\/wp-json\/wp\/v2\/posts\/25637825#wpcf7-f25556854-o1\" method=\"post\" class=\"wpcf7-form init\" aria-label=\"Contact form\" novalidate=\"novalidate\" data-status=\"init\">\n<fieldset class=\"hidden-fields-container\"><input type=\"hidden\" name=\"_wpcf7\" value=\"25556854\" \/><input type=\"hidden\" name=\"_wpcf7_version\" value=\"6.1.4\" \/><input type=\"hidden\" name=\"_wpcf7_locale\" value=\"en_US\" \/><input 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}<\/style> <script>document.addEventListener(\"DOMContentLoaded\",function(){document.querySelectorAll('.wpcf7-form').forEach(function(e){e.addEventListener('submit',function(){if(document.getElementById('cf-turnstile-cf7-2851498157')){setTimeout(function(){turnstile.reset('#cf-turnstile-cf7-2851498157');},1000)}})})});<\/script> <\/div><br\/><input class=\"wpcf7-form-control wpcf7-submit has-spinner\" type=\"submit\" value=\"Submit\" \/>\n<\/p><div class=\"wpcf7-response-output\" aria-hidden=\"true\"><\/div>\n<\/form>\n<\/div>\n\n<\/div><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Introduction If you invest or trade in the Indian stock market, you may have noticed a small charge called STT in your contract note. Many investors see this deduction but are not fully sure what it means. Understanding taxes related to investments is an imperative because they directly affect your returns. In this blog, we [&hellip;]<\/p>\n","protected":false},"author":137,"featured_media":25637837,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[802,1867],"tags":[],"class_list":["post-25637825","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-articles","category-stock-marketing"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>What is Securities Transaction Tax (STT)? Meaning, Rates, and How it Works<\/title>\n<meta name=\"description\" content=\"Working out tax and wondering what Securities Transaction Tax is? 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