# Section 36(1)(xv) & 36(1)(xvi) - STT and CTT

## Sec 36(1)(xv) - Securities Transaction Tax (STT)

## Sec 36(1)(xvi) - Commodities Transaction Tax (CTT)

## Allowability

STT / CTT is allowed as a deduction only if the assessee has held the underlying shares / securities / commodities as stock-in-trade (i.e., the income from such transactions is taxable under PGBP, not Capital Gains).

## Reasoning

If shares are held as investment → income is Capital Gains, and STT cannot be a PGBP deduction.
If shares are stock-in-trade → income is PGBP, and STT is a business expense.

Worked example

### Example 1

Example: A share trader (treats shares as stock-in-trade) pays ₹40,000 STT during the year. → Allowed u/s 36(1)(xv) as PGBP deduction.

If an investor (treats shares as capital asset) pays STT → not deductible under 36(1)(xv); however, STT cannot be added to cost of acquisition for capital gain either.

⚠️ Common exam mistakes

Allowing STT/CTT for investors as PGBP expense.
Adding STT to cost of acquisition while computing capital gains — STT is specifically excluded.

Reference: Section 36(1)(xv) and 36(1)(xvi) — Income Tax Act, 1961

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Section 36(1)(xv) & (xvi) - STT and CTT Deduction

Worked example

⚠️ Common exam mistakes