What is securities transaction tax / stt?

Securities Transaction Tax (STT) is a tax that is levied on the purchase or sale of securities listed on recognized stock exchanges in India. It was introduced in India in 2004 and is a tax on the transaction value of securities. STT is payable by both buyers and sellers of securities and is collected by the stock exchange at the time of the transaction.

The Securities Transaction Tax rates vary depending on the type of security being traded. For example, for equity shares, the rate is 0.1% on the transaction value for both buyers and sellers, while for equity-oriented mutual funds, the rate is 0.001% on the transaction value for the seller only.

The Securities Transaction Tax is an important source of revenue for the Indian government and helps to fund various development programs and initiatives. However, it is also seen as a deterrent to trading activity and can increase the cost of trading, especially for high-frequency traders.