Comment on STT Trap - Options Expiry - NSE BSE MCX-SX

jay commented on 27 Oct 2015, 08:14 PM

Thank you Nitin for your prompt reply. if this is true that for equity transactions the Govt charges STT (that too 0.1 % which is very high and eats away at your profits.) on both buy and sell side, then how is it fair? As that would mean on each transaction, STT is being charged on both parties. So in other words, If I buy and sell a security, I pay STT twice already and on top of that my counterpart investor also pays STT twice again on behalf of this same event. So in other words, a single buy and sell transaction will let the Govt to charge 4 times STT from both parties ? Such a policy would run against principles of natural justice for any policy, govt or otherwise.
2) For that matter, same case can be made even of charging of exorbitant STT charge, a policy aimed insidiously at retail investors and those holding on to ITM options , that too when no actual delivery is involved and for all practical purposes is simply a cash settled derivative transaction.
3) This is especially absurd when you consider the non exercisable and non deliverable nature of Index options when coupled with their artificially high standardized price.
4) Lastly, Automatic exercise rule also violates the principle and spirit of a contract, which is ‘Optional’ by its very nature.

I am not legal professional but if one could find a good attorney to take on the big Govt losers, I am sure we got a case here.

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