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Securities Transaction Tax Interview Questions & Answers - Learning Mode
COOLINTERVIEW.COM TAX INTERVIEW QUESTIONS SECURITIES TRANSACTION TAX INTERVIEW QUESTIONS QUESTIONS & ANSWERS - LEARNING MODE

Securities Transaction Tax Interview Questions & Answers - Learning Mode

A lot of people do not declare their profit and avoid paying capital gain tax, as government can only tax those profits, which have been declared by people. To fight with this situation Government has introduced STT (Securities Transaction Tax ) which is applicable on every transaction done at stock exchange. That means if you buy or sell equity shares, derivative instruments, equity oriented Mutual Funds this tax is applicable. This tax is added to the price of security during the transaction itself, hence you cannot avoid (save) it. As this tax amount is very low people do not notice it much.

Try Securities Transaction Tax Interview Questions & Answers - Exam Mode

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Securities Transaction Tax Interview Questions & Answers - Learning Mode
Try Securities Transaction Tax Interview Questions & Answers - Exam Mode
Question: Give an example of Securities Transaction Tax (STT)?

Answer: Suppose a trader buys 500 shares worth Rs.10000 at Rs.20 each and sells it at Rs.30 each. If the trader sells the shares the same day then intraday STT rate will apply which is 0.025%.

So, STT = 0.025*30*500 = Rs.375

Similarly, for futures and options, STT applicable is 0.01%. Suppose a trader buys 5 lots of Nifty futures at Rs.5000 and sells it at Rs.5010, The lots size of nifty is 50 then STT is calculated as,

STT = 0.01*5010*50*5 = Rs.125.25. Source: CoolInterview.com
Question: What are the main features of Securities Transaction Tax (STT)?

Answer: STT is a simple direct tax and is not very complicated to calculate or levy. Some of the most distinguishing features of STT are as listed below:-

STT is levied on all sell transactions for both options as well as futures.
For purpose of STT calculation, each future trade is valued at the actual traded price while each option trade is valued at premium.
The amount STT that a clearing member has to pay is the sum total of all the STT taxes of trading members under him. Source: CoolInterview.com
Question: What is meant by Securities, in case of Securities Transaction Tax (STT)?

Answer: Securities is defined in Section 2(h) of the Securities Contracts (Regulation) Act, 1956, to include:-

(i) shares, scrips, stocks, bonds, debentures, debenture stock or other marketable securities of a like nature in or of any incorporated company or other body corporate.
(ii) derivative.
(iii) units or any other instrument issued by any collective investment scheme to the investors in such schemes.
(iv) security receipt as defined in section 2(zg) of the Secularization and Recon Source: CoolInterview.com
Question: What is Securities Transaction Tax (STT)?

Answer: Securities Transaction Tax (STT) is levied on every purchase or sale of securities that are listed on the Indian stock exchanges. This would include shares, derivatives or equity-oriented mutual funds units. The rate of tax that is deducted is determined by the central government, and it varies with different types of transactions and securities. Source: CoolInterview.com
Question: Securities Transaction Tax (STT) is levied on which types of Transactions?

Answer: Securities transaction tax is levied on various types of transactions made on the domestic stock exchanges in India. According to the Securities Contract Act, 1956, following are the transactions covered under the same.

Shares, bonds, debentures or any such marketable security which is traded at the stock market.
Derivatives traded in the market
Units issued by any collective investment scheme to customers.
Government securities that are of the nature of equity.CoolInterview.com
Question: What is the difference between Securities Transaction Tax (STT) and Income Tax?

Answer: Taxation on the money made via share market trading depend largely on the purpose for which share transactions are done. An individual can trade shares for business purposes or as an investment activity. In both the cases the STT that is levied by the government, varies. Depending upon this factor, following two heads can be differentiated.

Income from Capital Gains:-

Income from capital gains is applicable when the assesse is a salaried or self-employed person who deals in Source: CoolInterview.com
Question: When is Securities Transaction Tax levied?

Answer: Securities transaction tax is levied on each purchase and sale of equity listed on a domestic and recognized stock market. The rate of taxation is determined by the government. All stock market transactions that involve equity or equity derivatives like futures and options are liable to be taxed under the STT act. STT is charged as soon as a share transaction is completed. This makes STT fast, transparent and effective. Since the tax is levied as soon as the transaction arises, instances of non- Source: CoolInterview.com
Question: What is the scope of Securities Transaction Tax (STT)?

Answer: According to the Securities Contracts (Regulation) Act, 1956, STT would be applicable on following securities:-

Shares, bonds, debentures, debenture stock or other marketable securities of a like nature in or of any incorporated company or other body corporate
Derivatives
Units or any other instrument issued by any collective investment scheme to the investors in such schemes
Security receipt as defined in section 2(zg) of the Securitisation and Reconstruction of Source: CoolInterview.com
Question: What is the rate of Securities Transaction Tax (STT)?

Answer: STT, or Securities Transaction Tax, is a tax levied on securities trades (not on commodities or currency trades). Different STT rates are applicable for Equity (cash) and Futures and Options (F&O) transactions. STT is levied on trades on the National Stock Exchange (NSE), Bombay Stock Exchange (BSE), and other recognized stock exchanges. For commodities, CTT (Commodities Transaction Tax) is levied.

Equity: If the trade is a equity delivery trade, than a tax of 0.1% on the turnover is levi Source: CoolInterview.com
Question: What are taxable transactions in case of Securities Transaction Tax (STT)?

Answer: Purchase and Sale of securities through a recognized stock exchange in India are called taxable transactions. STT is not applicable on off-market transactions. Source: CoolInterview.com
Question: What is the rate of Securities Transaction Tax (STT) on various Securities?

Answer: The table below depicts the rate at which various securities are taxed. The rate of taxation for STT is set by the government and depends upon the type of security and also on the fact that the transaction is sale or purchase. Apart from all the advantages that STT offers with respect to transparent and timely payment of tax on trading instruments, STT also ensures that inflow of speculative cash in reduced in any market.

S.No.


Taxable Securities Transaction


Rate o Source: CoolInterview.com
Question: What is Securities Transaction Tax, STT?

Answer: Securities transaction tax is a type of tax levied on gains from securities. This includes mainly equities and futures and options. The rate of taxation is different for different types of securities. STT can basically be understood as a type of tax levied on transactions done in the domestic stock exchange. Securities transaction tax is a direct tax and is levied and collected by the central government of India.

The most prominent point about securities transaction tax is that STT is app Source: CoolInterview.com

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