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Finance Bill: Centre hikes STT on futures and options trading by up to 25%

Finance – The Securities Transaction Tax (STT) on the sale of futures and options contracts was increased by up to 25% on Friday by the Center. The STT on the sale of options has been raised to 23.52% in the Finance Bill of 2023, while the STT on the sale of futures contracts has been raised to 25%.


STT was presented in 2004 and is exacted on exchanges including different kinds of protections through the stock trade course. Under STT, all stock market transactions, including those involving mutual funds, that involve equity or equity derivatives are liable.

The sell side charges 0.025% for STT for intraday trades. It charges a fee of 0.1% on both the buy and sell sides for delivery transactions.



How much more has STT grown?


On a turnover of Rs. 1 crore, the STT on the sale of options has been raised by 23.5 percent to Rs. 2,100, representing an increase of Rs. 1,700. STT is applied to the premium, not the strike price, when purchasing options.


The STT has been increased from Rs 1,000 to Rs 1,250 for forward contract sales with a turnover of Rs 1 crore. This shows an increment of 25%.


On Friday, the Finance Bill was approved by the Lok Sabha without any debate.



Will choice dealers see additional progressions from Walk 30?


Additionally, as of March 30, the Do Not Exercise (DNE) facility for options traders will be discontinued by the National Stock Exchange (NSE).


Traders can use this option to automatically square off their positions. The transaction will be settled automatically if the merchant fails to accept delivery. The merchant is responsible for paying the remaining amount.


Because of this, brokers can transfer option contracts to their customers. The dangers associated with physical settlement are avoided by the DNE feature.


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