NISM Certifications · NISM-Series-VIII: Equity Derivatives · Accounting and Taxation
Which of the following is levied by the government on the sale of exchange-traded equity index options and computed on the option premium?
Securities Transaction Tax is levied on the sale of exchange-traded options and is computed on the option premium, payable by the seller. It is separate from stamp duty, which is charged to the buyer.
- ASecurities Transaction TaxCorrect
- BStamp duty on buyer
- CDividend distribution tax
- DWealth tax
Explanation
Securities Transaction Tax is levied on the seller of options on the premium (for a sale of an option in securities). Dividend distribution tax and wealth tax are not applicable to this transaction, and stamp duty is a separate levy on the buyer, not the one computed as STT.
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