What is Securities Transaction Tax (STT)?

STT is a transaction tax the Indian government charges on trades done through recognised stock exchanges, and it’s collected by the broker and paid to the exchequer, so it’s not a broker fee at all. The rate differs by segment: for equity delivery, STT applies on both the buy and sell leg; for equity intraday, it applies only on the sell side; and for F&O, options and futures are taxed differently, with options STT calculated on the premium value and futures STT on the traded value. Rates have changed more than once in recent years, including a hike on F&O STT that took effect from October 2024, so you always check the current rate rather than assuming an old number still applies. STT shows up as a distinct line in the contract note, and you factor it into your breakeven calculation, especially for options, where it can be a meaningful share of a small premium.