NISM Certifications · NISM-Series-VIII: Equity Derivatives · Accounting and Taxation
Which tax is levied on the sale of an option in equity derivatives on the exchange, charged on the option premium for a sale transaction?
Securities Transaction Tax is charged on the option premium when an option is sold. It is not charged on the strike value for a normal sale, and stamp duty and capital gains tax at source are different levies that do not apply this way.
- ASecurities Transaction Tax on the premiumCorrect
- BStamp duty on the strike value
- CSecurities Transaction Tax on the strike price
- DCapital gains tax at source
Explanation
For an option sold, STT is levied on the option premium. When an option is exercised, STT applies on the settlement price, which is a separate case. Futures sales attract STT on the traded price.
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