STT tax on futures and options set to increase from October 1; check details

Securities Transactions Tax (STT) on the futures and options (F&O) segment will increase from October 1, 2024, after the income tax proposal of this year’s Union Budget comes into effect.

Union Finance Minister Nirmala Sitharaman, in the Budget for FY 2024-25 presented in July announced an increase in the STT on futures and options sales to 0.02% and 0.1%, respectively.

Also, income from companies' buybacks of shares will attract a tax in the hands of recipient investors similar dividends. Presently, such income is being taxed in the hands of the company. The cost of such shares will be treated as a capital loss to the investor.

What is STT?

The Securities Transaction Tax is a direct tax levied on the sale and purchase of securities listed on stock exchanges.

STT is levied on equity shares, futures and options contracts. There are different rates of STT for various trades such as intraday trade, equity delivery and futures and options contracts.

How much will STT increase?

From October 1, STT on sales of futures in securities will increase from 0.0125% to 0.02% of the price at which such futures are traded. The tax on the sale of an option in securities will rise from 0.0625% to 0.1% of the option premium.