STT is levied on turnover, not on profit. It applies to the value of the trade, it is collected by the exchange at the point of execution, and a losing trade pays exactly the same rate as a winning one.
That single property is what makes it a strategy design input rather than an accounting detail. Any tax on turnover penalises the frequency of trading, not the outcome of it.
Rates by segment
| Segment | Rate | Charged on |
|---|---|---|
| Equity delivery | 0.1% of turnover | Buy and sell, both sides |
| Equity intraday | 0.025% of turnover | Sell side only |
| Equity futures | 0.05% of turnover | Sell side only |
| Equity options | 0.15% of premium | Sell side only |
| Options exercised | 0.15% of intrinsic value | Buyer |
Equity delivery and intraday rates are confirmed against an NSE circular. The three derivatives rows reflect the Union Budget 2026-27 increase, effective for contracts entered on or after 1 April 2026: futures went from 0.02% to 0.05%, options premium from 0.10% to 0.15%, and exercised options from 0.125% to 0.15% of intrinsic value (ClearTax summary, CAclubindia summary). That was the second increase in eighteen months, after the October 2024 revision, so check the current Finance Act before quoting a rate from an older article.
The direction of travel matters more than any single number. STT on derivatives has risen twice in quick succession with the stated aim of curbing speculative F&O volume, which means a high-frequency derivatives strategy is being taxed on a deliberately moving target.
What it costs a strategy
STT is a function of how often you trade:
annual STT drag = sides traded per year x rate per side
A delivery equity strategy holding 20 stocks and fully replacing them monthly trades 24 sides a year. At 0.1% per side that is 2.4% of capital annually in STT alone, before brokerage, exchange charges, stamp duty, GST, DP charges and slippage. The same strategy rebalanced quarterly pays 0.8%.
Turnover is therefore the lever. Halving rebalance frequency halves the tax, and the question is whether your signal decays slowly enough to survive the wider gap between rebalances.
The rest of the stack
STT is one line in an Indian equity delivery bill. The others are brokerage, exchange transaction charges, the SEBI turnover fee, stamp duty on the buy side, GST on brokerage and charges, and DP charges levied per scrip when you sell. The saral.money backtester can apply a specific broker’s real equity-delivery charge stack rather than a single blended percentage, so the drag in the equity curve reflects the bill you would actually receive.
Caveats
Rates change with the Union Budget, and derivatives rates have changed more than once in recent years. A backtest run against a stale cost assumption will misstate a high-turnover strategy badly, and understate it in the direction that makes the strategy look tradeable.
Treat the cost model as an input you review annually, not as a setting you configure once.