When is stt charged




















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STT is required to be collected by a recognised stock exchange or by the prescribed person in the case of every Mutual Fund or the lead merchant banker in the case of an initial public offer, as the case may be, and subsequently payable to the Government on or before the 7th of the following month.

In case the above persons fail to collect the taxes, they are still obliged the discharge an equivalent amount of tax to the credit of Central Government within 7th of the following month. Further, failure to collect or, remit whatever has been collected will result in levy of interest and penal consequences too.

Hence, securities include all of the above the purpose of STT levy that are traded on recognized stock exchange. Off-market transactions are out of the purview of STT. Derivative contracts are generally settled in cash which means, stocks are not physically delivered and only the profits are paid and received by the contracting parties.

These transactions, as given in the table above, are subject to an STT levy of 0. However, no clarity emerged on the rate of STT that would apply to these kinds of transactions. Further, for such transactions, the stock exchanges began to levy an STT of 0.

The CBDT, in response, has issued a clarification dated 27 August , where it has observed that where a derivative contract is being settled by physical delivery of shares, such transaction would be similar to a transaction in equity shares where the contract is settled by actual delivery of shares.

Therefore, the STT rate as applicable to delivery based equity transactions would apply to such derivative transactions too.



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