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STT is a kind of turnover tax where the investor has to pay a small tax on the total consideration paid or received in a share transaction.

 STT was introduced in the Budget of 2004 and implemented in Oct 2004. The objective behind the levy is to mitigate tax evasion as the same is taxed at the source. Stocks, futures, options, mutual funds, and exchange-traded funds come under the ambit of STT.

The STT applicable in the case of the intraday transactions will be different from the one applicable in the case of delivery transactions. Likewise, the STT applicable in the case of buying security will be different from the one applicable in the case of selling the security.

STT will be applicable in the case of a transaction that takes place in the exchanges. For availing the exemption in the case of long-term capital gain, the asset under consideration has to be subjected to STT.