The government reduced this tax in the 2013 budget after protests for years by the brokers and the trading community.
For Equity Options, the STT has been reduced to 0.05% on the sell side of the premium amount.
Any equity share, which has been sold through a recognized stock exchange and on which STT has been paid and if it comes under LTCG, it'll be taxed at 10% whereas in case of STCG of such shares, the gains shall be taxed only at 15%, plus surcharge and education cess under section 111A of the Act.
In such cases the gains or losses are classified as business income, which is taxed at the regular rate of income-tax.
STT paid in respect of taxable securities transactions entered into in the course of business shall be allowed as deduction under section 36 of the Income-tax Act.
Until 31 March 2008, the amount of STT paid was allowed as rebate under section 88E of the Income-tax Act.