Difference between STT and CTT [A Complete Guide for Investors]

What is STT?

Securities Transaction Tax is the full name of the tax. It is an equities transaction tax that includes mutual funds (not on commodities or currency trades). STT applies to trades conducted on the National Stock Exchange (NSE), the Bombay Stock Exchange (BSE), and other recognized stock exchanges.

It is a direct tax levied by the Indian government. It is based on the following factors:

a. STT on Equities

Intraday trading will be subject to a Securities Transaction Tax of 0.025 percent on the entire sell amount.

On both the purchase and sell sides of the trade, STT on stocks acquired by delivery is 0.10 percent.

b. STT on Futures

Only the whole sell amount of the trade will be subject to the 0.01 percent Security Transaction Tax Levy on Equity Futures. The STT Fee remains the same for intraday and positional futures trading.

c. STT on Options

On the gross sell amount of the transaction, the Security Transaction Tax Rate on Equity Options will be levied at a rate of 0.05 percent. The STT Rate for options stays unchanged for intraday and positional trading.

d. STT on Mutual Funds

The Security Transaction Tax, which is imposed on equity-based mutual funds, is particularly burdensome on the sale side. It's based on a proportion of the unit price of 0.001%.

What is STT?

Commodity Transaction Tax (CTT) is a tax imposed on traders who trade commodities. It's a tax similar to STT that's applied when you buy and sell commodity futures and options contracts. The CTT tax was implemented in July 2013 and solely applies to non-agricultural commodities like gold, silver, copper, and crude oil.

a. CTT on Futures

On the entire sell value of the trade, a 0.01 percent Commodity Transaction Tax Rate on Futures will be levied. Both intraday and positional trades have the same CTT Rate for Futures.

b. CTT on Options

On the entire sell value of the trade, a 0.05 percent Commodity Transaction Tax Rate on Options will be levied. Both intraday and positional trades have the same CTT Rate for options.

How CTT differs from STT?

The main difference between STT and CTT is that STT is applicable on equities, derivatives and mutual funds whereas CTT is applicable only on commodity derivatives. Also, CTT is applicable only on sell side of the trade, whereas STT is applicable on buy side too in certain cases.