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NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Taxation of Equity Products

Under the Income-tax Act as taught for NISM X-B, which of the following transactions in listed equity shares attracts Securities Transaction Tax (STT) when the shares are sold on a recognised stock exchange?

Sale of delivery-based listed equity shares on a recognised stock exchange attracts STT. Off-market transfers, gifts and transmission to legal heirs do not take place on an exchange, so STT is not charged on them.

  1. ASale of delivery-based equity shares on the exchangeCorrect
  2. BOff-market transfer of shares between two demat accounts
  3. CGift of shares to a relative
  4. DTransmission of shares to a legal heir

Explanation

STT is levied on taxable securities transactions carried out on a recognised stock exchange, including delivery-based sales of listed equity shares. Off-market transfers, gifts and transmission are not exchange transactions, so no STT applies to them.

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