The merchants make a toast to modify the tax on the values
NEW DELHI: The proposed Budget to restrict the Securities Transaction Tax (STT) only to the difference between liquidation and exercise price In case of exercise of options. The movement it's a great relief for merchants as STT will not be levied on the value of the contract but on the difference between the exercise price and the market price.
STT is charged for each purchase or sale of listed securities, including shares, derivatives or mutual funds oriented to shares. At present, the buyer must pay STT at 0.125% of the liquidation price in the option contracts that are exercised. In case the option is not exercised, the seller has to pay STT at a rate of 0.05% on the premium of the option.
“Now it will be levied on the difference between the exercise price and exercise price of the option. This will reduce effective cost of the transaction ,’ said Arindam Chanda, chief executive, IIFL Securities. According to Vijay Chandok, MD & CEO — ICICI Securities, the STT change is a big relief to options merchants .