Budget 2024: Collected ₹1500 cr of STT last year, can increase to ₹2,500 cr at new rates, says Zerodha’s Nithin Kamath

Post Finance Minister Nirmala Sitharaman's announcement of the Union Budget 2024, Zerodha's co-founder Nithin Kamath, in a social media post on X, said that the brokerage firm has collected ₹1500 crore of Securities Transaction Tax (STT) last year. He further went on to say that the volumes don't drop, this will increase to about ₹2500 crores at the new rates.

“We collected about ₹1500 crores of STT last year, @zerodhaonline. If the volumes don't drop, this will increase to about ₹2500 crores at the new rates,” Kamath said.

The 2024 budget has raised the STT on Futures and Options (F&O) to 0.02 percent and 0.1 percent, respectively. Additionally, income received from share buybacks will now be taxed in the hands of the beneficiaries.

“It is proposed to increase the rates of STT on sale of an option in securities from 0.0625 percent to 0.1 percent of the option premium, and on sale of a futures in securities from 0.0125 percent to 0.02 per cent of the price at which such futures are traded,” FM said during the announcement speech.

STT on options goes up from 0.062% to 0.1%. STT on futures goes up from 0.0125% to 0.02% from October 1.

“The capital gains tax has been increased from 10% to 12.5%, and it will apply from today. If the idea was to cool down the activity in the markets, this might just do the trick,” Kamath further added.

What is STT?

The securities transaction tax (STT) is a mandatory charge applied as a percentage of the transaction value. For delivery-based equity share trades, the STT rate is 0.1%.

Introduced in the 2004 Budget and implemented in October of the same year, the STT aims to reduce tax evasion by taxing transactions at the source. This tax applies to stocks, futures, options, mutual funds, and exchange-traded funds.

STT will apply to transactions that occur on exchanges. To qualify for the long-term capital gain exemption, the asset in question must be subject to STT.