STT and Trading Charges in India: The Full Cost Guide
Securities Transaction Tax, or STT, is a tax the government charges on the value of every trade you execute on a recognised Indian stock exchange, and your broker collects it at the moment of the trade. It is one line in a stack of six or seven separate charges that together decide what a trade actually costs you.
STT is a tax on transaction value, not on profit, so you pay it whether the trade makes money or loses money. That single fact clears up most of the confusion people feel the first time they open a contract note and find the net amount does not match their mental maths.
Below is the full cost stack, STT rates by segment, a rupee by rupee example, and the one expiry day mistake that can turn a winning option into a loss.
What exactly is STT, and who collects it?
STT arrived in 2004 to make securities taxation easier to enforce. Rather than chasing every trader, the government taxes the transaction and makes the exchange and broker collect it. Your broker debits it and routes it onward. You file nothing.
Two things set STT apart. No GST is added on top of it. And it is not deductible against capital gains, though STT paid while earning business income from trading can be claimed as a business expense.
The full charge stack on a trade
People blame brokerage for high costs. On most trades brokerage is not even the largest line.
Brokerage
Discount brokers usually charge a flat amount per executed order and often nothing on delivery. Full service brokers charge a percentage of turnover. This is the only line you can shop around for.
Exchange transaction charges
NSE and BSE charge a small percentage of turnover for using their matching engines. Rates differ by exchange and segment and are revised through circulars. Options carry a higher rate because the charge applies to premium turnover.
SEBI fee, stamp duty, GST and DP charges
SEBI levies a tiny regulatory fee on turnover. Stamp duty is a state levy charged only on the buy side. GST at 18% applies to brokerage and exchange transaction charges, not to STT or stamp duty. Selling from your demat account also triggers a flat depository participant fee per scrip per day, whatever the quantity, so offloading many tiny holdings is disproportionately expensive.
STT rates by segment, effective 1 April 2026
| Segment | Rate | Side charged | Charged on |
|---|---|---|---|
| Equity delivery | 0.1% | Both buy and sell | Turnover |
| Equity intraday | 0.025% | Sell only | Turnover |
| Futures (index and stock) | 0.05% | Sell only | Contract value |
| Options, sale of option | 0.15% | Sell only | Premium |
| Options, exercised or assigned | 0.15% | Buyer pays | Settlement or intrinsic value |
Read that last row twice. It is the row that costs traders real money.
A worked example: one intraday equity trade
Suppose you buy 200 shares at Rs 1,500 and sell the same day at Rs 1,512.
- Buy turnover: 200 multiplied by Rs 1,500, which is Rs 3,00,000
- Sell turnover: 200 multiplied by Rs 1,512, which is Rs 3,02,400
- Gross gain: Rs 2,400
STT on intraday is 0.025% on the sell side only, so 0.025% of Rs 3,02,400 is Rs 75.60. Take brokerage as a flat Rs 20 per order, giving Rs 40 for two orders. Assume exchange transaction charges plus the SEBI fee come to roughly Rs 20 across both legs, and buy side stamp duty to about Rs 9. GST at 18% on brokerage plus transaction charges, roughly Rs 60, adds about Rs 11.
Total charges land near Rs 155.60, so a Rs 2,400 gross gain becomes about Rs 2,244 net. Costs took roughly 6.5% of the profit on a move of 0.8%.
Now flip it. Had the stock moved 0.05%, gross gain would be Rs 150 and charges would put you down for the day. Replace the illustrative brokerage and exchange figures with your broker’s tariff sheet and the current circular.
Why does letting an option expire cost so much more?
When you sell an option in the market, STT is 0.15% of the premium. When an in the money option is exercised at expiry, STT is 0.15% applied to the settlement value, and the buyer pays it.
Suppose you hold one lot of a Nifty 25,000 call and the index settles at 25,040. Assume the lot size is 75, and confirm the live figure on the exchange website because lot sizes are revised periodically.
- Intrinsic value: 40 points multiplied by 75, which is a settlement credit of Rs 3,000
- Squaring off at a premium of 40 instead: STT is 0.15% of Rs 3,000, about Rs 4.50
Under the exercised limb the same 0.15% attaches to settlement value rather than to the modest premium you would have collected in the market. For deep in the money positions, where settlement value is large relative to what you paid, the gap can push a profitable position negative on expiry day charges alone.
The fix is a habit: square off before the close on expiry day rather than letting an in the money option lapse into exercise. The piece on how options expiration actually works walks through the settlement sequence.
How do you keep charges from eating your returns?
- Add round trip cost to your entry price and ask whether the expected move clears it.
- Trade fewer, larger positions, especially in delivery where DP charges are flat per scrip.
- Square off in the money options rather than allowing exercise.
- Flat per order plans suit large orders, percentage plans suit very small ones.
- Read your contract note monthly. Charges you ignore are charges you never fix.
Charges interact with tax. Futures and options income is non speculative business income reported in ITR-3, intraday equity is speculative business income, and STT on both is a deductible business expense. For delivery investors, long term gains above Rs 1.25 lakh in a year are taxed at 12.5% and short term gains at 20%. A read of how investment returns get taxed in India ties the two together.
One risk note. Low charges do not make a strategy safe. Frequent trading carries a real chance of losing capital quickly, and cost efficiency only changes how fast.
Frequently Asked Questions
Is STT charged on both buying and selling shares?
It depends on the segment. Equity delivery attracts 0.1% on both legs. Intraday equity attracts 0.025% on the sell leg only. Futures attract 0.05% on the sell side, and option sales 0.15% on premium, also on the sell side. In most trading segments only one leg is taxed.
Can I claim STT as a deduction while filing my income tax return?
If your trading is treated as business income, such as futures and options or intraday equity, STT is allowed as a business expense against that income. If you report capital gains as a delivery investor, STT cannot be deducted from sale consideration or added to cost of acquisition. Treatment follows how the activity is classified.
Why did my broker charge me even though the trade made no profit?
Because nearly every charge is calculated on turnover, not outcome. STT, exchange transaction charges, stamp duty, the SEBI fee and brokerage are all a function of value traded. A losing trade attracts the same charges as a winning one of the same size.
Are charges different on BSE and NSE?
STT, stamp duty, the SEBI fee and GST are identical because they are statutory. Exchange transaction charges differ between the two, and by segment. The gap is usually small on equities but matters for very high volume traders. Current rates sit in each exchange’s circulars.
Does STT apply to IPO allotments?
No. IPO applications are primary market subscriptions and attract no STT at allotment. Once the shares list and you sell them, normal equity delivery rates apply on that sale.
How much do charges matter for a long term investor?
Much less than for a trader, but not nothing. Buy once, hold a decade, and you pay round trip charges twice in ten years. The bigger drag is usually recurring, such as a fund expense ratio. Learning to read a stock quote properly saves more than shaving brokerage.
Key Takeaways
- STT applies to transaction value, not profit, so losing trades pay it, and no GST sits on top of STT.
- Delivery is 0.1% both legs, intraday 0.025% on sell, futures 0.05% on sell, option sales 0.15% on premium.
- Exercised options attract 0.15% on settlement value and the buyer pays, so squaring off before expiry usually costs far less.
- DP charges are flat per scrip per sale, making the sale of many small holdings costly.
- Work out round trip cost and break even before entering, not after the contract note arrives.
- Brokerage is negotiable and statutory charges are not, so your real lever is trade frequency and size.
