Budget 2024: Securities transaction tax (STT) on F&O hiked to 0.02% and 0.1%

July 23, 2024

Synopsis
The 2024 budget has increased the securities transaction tax (STT) on Futures & Options (F&O) of securities to 0.02 percent and 0.1percent respectively.

The 2024 budget has increased the securities transaction tax (STT) on Futures & Options (F&O) of securities to 0.02 percent and 0.1 percent respectively and income receipts from share buybacks would be taxed in the hands of beneficiaries.

STT on F&O increased

Futures up from 0.0125% to 0.02%

Options up from 0.0625% to 0.1%

According to the FM speech, "It is proposed to increase the rates of STT on sale of an option in securities from 0.0625 percent to 0.1 percent of the option premium, and on sale of a futures in securities from 0.0125 percent to 0.02 per cent of the price at which such futures are traded."

What is Securities transaction tax

Securities transaction tax is a mandatory charge levied as a percentage. STT rate is 0.1% of the transaction value for delivery-based equity share trades.

STT was introduced in the Budget of 2004 and implemented in Oct 2004. The objective behind the levy is to mitigate tax evasion as the same is taxed at source. Stocks, futures, option, mutual funds and exchange traded funds come under the ambit of STT.

The STT applicable in the case of intraday transaction will be different from the one applicable in the case of delivery transaction. Likewise, the STT applicable in the case of buying a security will be different from the one applicable in the case of selling the security.

STT will be applicable in the case of transaction that takes place in the exchanges. For availing the exemption in the case of long-term capital gain, the asset under consideration has to be subjected to STT.

[The Economic Times]