What Is STT in Stock Market? Latest STT Rates, Full Form and Refund Rules Explained

What is STT in Stock Market?

STT in the stock market is a small tax charged on every buy or sell transaction of certain securities on recognised Indian exchanges. It quietly sits in the contract note with brokerage, GST, exchange fees, and so on – and many new traders first notice it only when profits look a bit thinner than expected.

STT stands for Securities Transaction Tax and is levied on trades in listed equity shares, equity mutual funds, and derivatives like futures and options, but not on commodities or currency.

It is collected automatically by the exchange/broker and passed on to the government, so there is no separate payment step. From 1 April 2026, after the latest Union Budget update, STT on equity futures is set at 0.05% on the sell side, while on options, it is 0.15% on the premium or intrinsic value, depending on the situation.

For delivery trades, STT is typically 0.1% on both buy and sell of equity shares, while intraday equity trades attract 0.025% on the sell side. It sounds tiny, but for active traders, these small percentages add up over hundreds of trades and can be the difference between a strategy looking great on Excel and only “okay” in the actual trading account.

Is STT Refundable?

No, STT is not refundable – once it is charged on a transaction, it effectively becomes a cost of trading and cannot be claimed back as a refund even if there is a loss. This is one of the more annoying realities for frequent traders, especially in futures and options, where many trades end up in small losses or scratch trades but STT still bites into the P&L.

STT is different from income tax or capital gains tax. Income tax is calculated on net profit and can be adjusted with losses, but STT is charged on the trade value itself, irrespective of profit or loss. It also cannot be claimed as a deduction under common sections of the Income Tax Act, so there is no relief there either.

There is, however, one indirect “benefit”: for equity shares to qualify for long‑term capital gains tax at the favourable 10% rate beyond ₹1 lakh, STT must have been paid on purchase and sale. So while STT is not refunded, its payment is a condition to avail beneficial capital gains tax treatment on listed securities, which matters for long‑term investors.

STT Full Form

STT full form in the stock market is Securities Transaction Tax. It was introduced in India in 2004 as a way to simplify the taxation of stock market transactions and ensure that the government collects revenue directly through the exchanges.

The idea was simple: instead of chasing every trader for small capital gains taxes, collect a tiny tax on every eligible trade and let income tax handle the rest on profits. Over time, rates have moved up and down – especially for F&O – but the core concept remains the same: a small, unavoidable tax on the value of trades in listed securities.

For regular investors, STT becomes part of the mental “all‑in cost” of trading, along with brokerage, GST, SEBI charges, and stamp duty. Serious traders, especially those running intraday or derivative strategies, often track STT per trade or per month just to check whether the strategy still works after all these frictions.

Why STT Matters to Traders and Investors?

STT matters because it silently chips away at net returns and hits active traders harder than long‑term investors. For someone who buys and holds a stock for five years, STT may feel like a small one‑time charge. For someone placing dozens of intraday or options trades in a week, it becomes a recurring, visible cost.

Some practical takeaways that many traders follow:

• Always check the contract note to see STT on intraday, delivery, futures and options separately.
• When back‑testing strategies, factor in realistic trading costs including STT, not just brokerage.
• Be extra careful around option exercise and expiry, where STT on intrinsic value can suddenly spike and eat into profits.
• In short, STT will not make or break a solid long‑term portfolio, but for anyone active in F&O or high‑frequency intraday, understanding this small tax is as important as understanding charts or indicators.

Disclaimer

This content is for general information on Securities Transaction Tax (STT) in India and does not constitute tax, legal or investment advice. STT rates, rules and tax treatment can change over time. Readers should verify current provisions and consult a qualified tax or financial professional before making trading or tax decisions.