When you buy or sell equities and commodities, there are taxes applicable mostly on selling and sometimes on buying as well. The Names of these taxes are STT and CTT. Do you know what is STT and CTT? If your answer is no, let’s discuss CTT and STT in detail.
Table of Contents
What is STT ?
Full form of STT is Securities Transaction Tax. It is a tax charged on equities transactions including Mutual funds(not on commodities or currency trades). Trades on the National Stock Exchange (NSE), the Bombay Stock Exchange (BSE), and other approved stock exchanges are subject to STT.
It is a direct tax imposed by Government of India. It is basically vary upon below factors :
- The Section of securities (Equity, Futures & Option, Mutual Funds, etc)
- Purchase or sell transactions.
- Trade Type (Intraday / Equity Delivery)
Examples of STT (Securities Transaction Tax)
-
Intraday
Intraday trading will be subject to a 0.025 percent Securities Transaction Tax on the total sell amount of the trade.
Let’s imagine you acquired stocks of Rs. 35,000 on Wednesday and sold them at Rs. 38000 before the market closed. The following is the amount of STT Tax that will be applied to this trade:
| Sell Amount of Stock in (Rs.) | STT Tax ( 0.025%) in (Rs.) |
|---|---|
| 60,000 | 9.5 |
-
Delivery
STT on stocks acquired via delivery is 0.10 percent on both the buy and sell sides of the trade.
Suppose you purchased Rs. 250,000 worth of stock in 2019 and sold it for 450,000 in 2021. The following is the amount of STT Tax that will be applied to this trade:
| Amount of Stock in (Rs.) | STT Tax ( 0.10%) in (Rs.) |
|---|---|
| Buying amount 250,000 + Selling amount 450,000 = 700,000 Total Shares Value | 700 |
-
Futures
The 0.01 percent Security Transaction Tax Levy on Equity Futures will be applied only to the total sell amount of the trade. For intraday and positional trading in futures, the STT Fee stays equivalent.
Suppose you acquired a futures contract worth Rs. 120,000 on Friday and sold it for 150,000 on Expiry. The following is the amount of STT Tax that will be applied to this Trade:
| Sell Amount of Stock in (Rs.) | STT Tax ( 0.01%) in (Rs.) |
|---|---|
| 150,000 | 15 |
-
Options
The Security Transaction Tax Rate on Equity Options will subsequently be imposed at a rate of 0.05 percent on the gross sell amount of the transaction. For intraday and positional trading, the STT Rate for options remains unchanged
Suppose you acquired an option contract worth Rs. 120,000 on Friday and sold it for 150,000 on Expiry. The following is the amount of STT Tax that will be applied to this trade:
| Sell Amount of Stock in (Rs.) | STT Tax ( 0.05%) in (Rs.) |
|---|---|
| 150,000 | 75 |
-
Mutual Funds
Particularly on the sell side of the trade is the Security Transaction Tax applied to Equity based mutual funds. It is calculated at a percentage of 0.001% of the unit price.
Suppose you invested 250,000 in equity-oriented mutual funds in 2019 and sold them for 350,000 in 2021. The following is the amount of STT Tax that will be applied to this trade:
| Sell Amount of Stock in (Rs.) | STT Tax ( 0.001%) in (Rs.) |
|---|---|
| 350,000 | 3.5 |
What is CTT?
CTT stands for Commodity Transaction Tax in Commodity trading. It’s a tax charged when you purchase and sell commodity futures & options contracts, and it’s similar to STT. CTT Tax was introduced in July 2013 and applies only to non-agricultural commodities such as gold, silver, copper, and crude oil.
Examples of CTT
-
Commodity Futures
Commodity Transaction Tax Rate on Futures will be imposed at a percentage of 0.01 percent on the total sell amount of the trade. For intraday and positional trading in futures, the STT Rate remains unchanged.
Suppose you acquired a Commodity futures contract worth Rs. 12o,000 on Friday and sold it for 150,000 on Expiry. The following is the amount of STT Tax that will be applied to this trade:
| Sell Amount of Stock in (Rs.) | STT Tax ( 0.01%) in (Rs.) |
|---|---|
| 150,000 | 15 |
-
Commodity Options
Commodity Transaction Tax Rate on Options will be imposed at a percentage of 0.05 percent on the total sell amount of the trade. The CTT Rate for options stays the same for both Intraday and positional trades.
Suppose you acquired an option contract worth Rs. 120,000 on Friday and sold it for 150,000 on Expiry. This trade will be subject to the following STT Tax:
| Sell Amount of Stock in (Rs.) | STT Tax ( 0.05%) in (Rs.) |
|---|---|
| 150,000 | 75 |
Difference between STT and CTT (STT vs CTT)
These are the major Difference between Securities Transaction Tax and Commodity Transaction Tax:
| Basis | STT | CTT |
| Applied on | Securities | Commodity |
| Segments | Delivery, Intraday, and F&O, Mutual funds | F&O |
| Applicable on | In some sections only on sell side and in some sections on both sides buy and sell. | This is only applicable on the sell side. |
Conclusion
Mostly people don’t like taxes but these taxes are imposed to regulate things and growth of that particular industry or segment.
This is all from our side regarding What is STT and CTT? Although, if you have any doubts about what is ctt & STT you can just comment below.
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FAQ About the stt/ctt
What is stt and ctt in upstox?
STT is Security Transaction Tax and CTT is Commodity Transaction Tax.
what is stt charges?
STT Charges are Security Transaction Tax imposed by the government of India on Equities.
CTT charges
CTT charges are 0.01 for Future and 0.05 for options in commodity trading.
How to avoid STT charges?
There is no way to avoid STT charges as they are imposed by the government of India.
STT charges full Form
STT charges Full form is Security Transaction Tax which is applicable on Equities.
