How is the Securities Transaction Tax (STT) calculated?
Securities Transaction Tax (STT) is a direct tax charged on the purchase and sale of securities listed on the exchanges in India.
The STT charges for different types of trades are as follows:
|Intraday||0.025% on the sell side.|
|Delivery||0.1% on both the buy and sell side.|
0.125% of the intrinsic value on options that are bought and exercised.
0.0625% of the premium for options that are shorted.
|Futures||0.0125% on the sell side.|
Since the STT is charged on both the buy and sell side for delivery trades, the average price is to be calculated. The formula to calculate the average price is:
Average price = (Buy Qty*Buy Price) + (Sell Qty*Sell Price) / (Buy Qty+Sell Qty)
- Intraday and delivery
500 shares were bought at ₹100 and then sold at ₹105. 200 shares were again bought at ₹110.
Average Price = [First Buy (500*100) + Second Buy (200*110) + Sell (500*105)] / [First Buy (500) + Second Buy (200) + Sell (500)]
Average Price = (50000 + 22000 + 52500)/1200
Average Price = ₹103.75
STT for intraday trades = 500 (intraday sell qty) * 103.75 (average price) * 0.025% (STT charge) = ₹13 (₹12.969 rounded off to the nearest rupee)
STT for delivery transaction = 200 (buy qty) * 103.75 (average price) * 0.1% (STT charge) = ₹21 (₹20.75 rounded off to the nearest rupee)
1 lot of Nifty futures contracts = 50 units
The price of 1 unit is = ₹15,000
The price of 1 lot of Nifty futures contracts = ₹7,50,000
STT = 0.0125% * ₹7,50,000 = ₹94 (₹93.75 rounded off to the nearest rupee)
The strike price of the Nifty call option = ₹17,000
Premium at which the options were sold = ₹60
The total premium received = ₹3,000 (50 * ₹60)
STT on the premium for options that are shorted = 0.0625% * ₹3,000 = ₹2 (₹1.875 rounded off to the nearest rupee)
1 lot of Nifty options contracts = 50 units
The strike price of the Nifty call option = ₹17,300
The spot price of the Nifty call option = ₹17,350
STT on the intrinsic value of options that are bought and exercised = 0.125% * 50 (₹17,350 - ₹17,300) * 50 (1 Lot) = ₹3 (₹3.125 rounded down to the nearest rupee)
- The strike price of the Nifty call option = ₹17,000
To learn all the charges involved while trading and investing, visit zerodha.com/charges#tab-equities. To calculate the charges for a particular trade, visit zerodha.com/brokerage-calculator#tab-equities.