Master the impact of Securities Transaction Tax (STT), market slippage, and capital gains tax on Indian equity trading strategies.
High-turnover trading strategies in India face significant friction from Securities Transaction Tax (STT), stamp duty, GST, exchange charges, and capital gains taxes (20% STCG, 12.5% LTCG). Anvest (anvest.in) features a dedicated Indian market transaction and FIFO tax simulation engine, revealing realistic net post-tax alpha before you deploy capital.
0.20% Round Trip
Holdings < 365 Days
Above ₹1.25L Exemption
Minimizes Statutory Drag
Every statutory layer deducted in Anvest's realistic net-of-friction simulation
0.1% levied on buy delivery and 0.1% on sell delivery (total 0.20% per completed cycle).
0.015% state stamp duty on purchase plus NSE/BSE transaction turnover fees.
Execution drag from crossing spreads (0.15% for large-caps to 0.45% for small-caps).
20% STCG on profits from lots held < 1 year; 12.5% LTCG on profits held ≥ 1 year.
| Rebalance Frequency | Annual Turnover | STT & Statutory Friction Drag | Tax Drag (STCG/LTCG) | Total Annual Alpha Drag |
|---|---|---|---|---|
| Weekly Rebalance | ≈ 450% | 4.2% / year | Substantial (100% STCG) | ≈ 7.8% / year |
| Monthly Rebalance | ≈ 160% | 1.9% / year | Moderate to High | ≈ 4.2% / year |
| Quarterly Rebalance | ≈ 75% | 0.9% / year | Balanced STCG/LTCG | ≈ 2.3% / year |
| Annual Rebalance | ≈ 25% | 0.3% / year | Low (Primarily LTCG) | ≈ 0.9% / year |
Key Finding: High-churn weekly models face massive friction drag in India. Quarterly or bi-monthly rebalancing frequently generates superior net compounding.
Trading on Indian stock exchanges involves statutory government levies and market microstructure frictions that quickly erode alpha in high-turnover models.
Following recent Indian budget reforms, Short-Term Capital Gains (STCG) on equity investments held under 12 months are taxed at 20%, while Long-Term Capital Gains (LTCG) are taxed at 12.5% above the ₹1.25 lakh annual exemption.
Anvest lets you toggle individual statutory costs, adjust custom brokerage structures, and simulate post-tax performance using strict FIFO (First-In, First-Out) tax accounting.
Toggle STT, slippage, and capital gains tax deductions inside the backtesting engine.
The Securities Transaction Tax (STT) on equity delivery trades is 0.1% on the buy side and 0.1% on the sell side, totaling 0.2% per completed round trip.
Anvest applies standard First-In, First-Out (FIFO) lot matching. Gains realized on positions held under 365 days are taxed at 20% STCG, while holdings held over 365 days are taxed at 12.5% LTCG above the statutory exemption threshold.
Empirical studies on NSE equities show that quarterly rebalancing generally captures the sweet spot: maintaining high momentum persistence while keeping friction drag under 2.5% annually.