Know the details about the How To Avoid STT Charges In Zerodha Step By Step Procedure, Guide on Avoid STT Charges In Zerodha Online Process

How to Avoid STT Charges in Zerodha: A Comprehensive Guide

Securities Transaction Tax (STT) is a charge that every trader has to bear while trading in the Indian stock market. However, there are certain strategies that traders can adopt to minimize these charges. In this article, we’ll explore how you can avoid STT charges while trading with Zerodha.

How To Avoid STT Charges In Zerodha Step By Step Procedure

What is STT?

Securities Transaction Tax is a tax levied on all transactions done on the stock exchanges. Introduced by the Indian Government in 2004, it is charged at the time of purchase and sale of securities.

STT in Zerodha

Zerodha, one of India’s leading online brokers, charges STT as per the rates prescribed by the government. For equity intraday trades, the STT is 0.025% on the sell-side.

How to Avoid STT Charges in Zerodha

While STT cannot be completely avoided, there are strategies to minimize this cost:

1. Trade Intraday

Intraday trading is the buying and selling of stocks within the same trading day. Since STT is only charged on the sell side for intraday trades at 0.025%, it is significantly lower than delivery trades.

2. Close your positions

STT on options can be quite high if left to expire. If the option is ‘in the money’, STT is charged on the entire contract value rather than just the premium. To avoid this, ensure you square off all ‘in the money’ options before they expire.

3. Trade in Currency and Commodity Derivatives

STT is not applicable on currency derivatives and on non-agricultural commodity derivatives. Trading in these segments can help you avoid STT.

Points to note

• Remember, STT cannot be completely avoided while trading in equities.
• STT is automatically deducted at the time of the transaction.

Frequently Asked Questions

1. Can I get a refund on STT paid?

No, once STT is paid, it cannot be refunded.

2. Is STT applicable on Mutual Funds?

Yes, STT is applicable on equity-oriented mutual funds at the rate of 0.001% at the time of redemption or sale.

3. Do I have to pay STT for off-market transactions?

No, STT is not levied on off-market transactions

While it’s impossible to completely avoid STT in Zerodha or any other brokerage, by following the strategies mentioned above, you can certainly minimize its impact on your trading costs.

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