What is STT tax?
Securities Transaction Tax (STT) is a tax levied on transactions done on the stock exchange and is applicable to trades of equity shares, derivatives, equity-oriented mutual funds, and option contracts.
FAQs about STT tax:
1. How is STT tax calculated?
STT tax is calculated based on the value of the transaction. For equity delivery trades, the STT rate is 0.1% on the turnover. For equity intraday trades, it is 0.025% on the sell side.
2. Who is liable to pay the STT tax?
The buyer and the seller of the securities are liable to pay the STT tax. It is deducted at the time of trading by the stock exchange.
3. Are there any exemptions from STT tax?
Certain transactions, such as off-market transactions between family members or gifts, are exempt from STT tax. Additionally, STT is not applicable in IPOs and mutual fund investments.
4. Can STT tax be claimed as a deduction while filing income tax returns?
No, STT tax cannot be claimed as a deduction while filing income tax returns. It is a separate tax levied on securities transactions.
5. Is STT tax applicable on all types of securities?
STT tax is applicable to transactions in equity shares, derivatives, equity-oriented mutual funds, and option contracts. It is not applicable on bonds, debentures, or commodities.
6. How does STT tax benefit the government?
STT tax serves as a source of revenue for the government. It helps in generating funds that can be used for various developmental activities.
7. Is STT tax different from GST?
Yes, STT tax and GST are two different types of taxes. STT tax is specific to securities transactions on the stock exchange, while GST is a tax on the supply of goods and services.
8. Can STT tax rates change over time?
Yes, STT tax rates can be changed by the government through notifications. It is important for investors to stay updated on any changes in STT rates.
9. Are STT tax rates uniform across all transactions?
STT tax rates may vary depending on the type of transaction. For example, the rate for equity delivery trades is different from the rate for equity intraday trades.
10. How is STT tax collected from investors?
STT tax is automatically deducted by the stock exchange at the time of the transaction. Investors do not have to separately pay STT tax.
11. Does STT tax impact the returns from securities investments?
Yes, STT tax can impact the returns from securities investments as it is an additional cost incurred by investors. It is important to factor in STT tax while evaluating the returns.
12. Are there any penalties for non-payment of STT tax?
Failure to pay STT tax can lead to penalties and legal consequences. It is important for investors to comply with the tax regulations to avoid any penalties.