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security transaction tax

(Querist) 09 September 2008 This query is : Resolved 
What is security transaction tax and how is calculation done ?
Guest (Expert) 22 September 2008
Securities Transaction Tax (STT) is the tax that is levied on the value of taxable securities transactions. STT is levied on all purchases or sale of an equity share in a company or a derivative or a unit of an equity oriented fund, entered into in a recognized stock exchange in India. This tax is charged and collected by the recognized stock exchange or by the prescribed person in case of mutual fund. The stock exchange or prescribed persons are responsible for remitting such STT collected to the government. STT will be levied only when the transaction take place in a recognized stock exchange in India. As a result, off market transactions are out of the purview of STT. STT plays a significant role in determining the taxability of the capital gains arising from sale of shares or securities.

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