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

Hi Nithin,

Thanks for the very informative blog however i have one small question.
Isn’t STT is payable by the “Purchaser” in case of Sale of an option in securities, where option is exercised ?
I am copying below the excerpts from NSE Website.

STT Computation
As per the Finance Act 2004, and modified by Finance Act 2008 (18 of 2008) STT on the transactions executed on the Exchange shall be as under:
Sr.No. Taxable securities transaction New rate from Payable by
A B C D
a Sale of an option in securities 0.05 per cent Seller
b Sale of an option in securities, where option is exercised 0.125 per cent Purchaser
c Sale of a futures in securities 0.01 per cent Seller
Value of taxable securities transaction relating to an “option in securities” shall be the option premium, in case of sale of an option in securities.
Value of taxable securities transaction relating to an “option in securities” shall be the settlement price, in case of sale of an option in securities, where option is exercised.

So if i let my ITM LONG CALL OPTION expire on expiration date then why i would need to pay the STT @ 0.125 %, as in settlement process i would be ” Seller”. Please clarify.
I would appreciate your views on this.

Thanks
Ashish

View the full comment thread »