Notice Board

Changes in relation to Securities Transaction Tax (STT)

This NSE Circular states that with effect from September 1, 2019 where option is exercised, STT at the prescribed rate shall be levied on the “intrinsic value” instead of the settlement price as at present. Further, in this regard, the
intrinsic value has been defined as the difference between the settlement price and the strike price of
the option.

Example: If you had 1 lot of Nifty 10800CE which expired In The Money by 100 rupees at 10,900, the STT payable will be applicable at ITM value * Lot size * STT payable = (10900 – 10800) * 75 * 0.125% = ₹9.38. Under the old system, the amount payable would have been Symbol value * Lot Size * STT Payable = 10900 * 75 * 0.125% = ₹1021.88. This new regulation has helped save a significant sum of money in taxes in case you hold ITM options until expiry.

Happy Trading!

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