What will happen if we donot square off our future contract on expiry day…
The contract will get exercised and will be cash settled by the exchanges.
If it is cash settled by exchange, then like option will they charge high stt or other charge??
@DA6704: Check this link in NSE website: https://www.nseindia.com/products/content/derivatives/equities/sec_tranc_tax.htm
Below is what it mentions (it only says 0.125 if option is exercised. Doesn’t mention anything about futures.)
STT Computation
As per the Finance Act 2004, and modified by Finance Act 2008 (18 of 2008) STT on the transactions executed on the Exchange shall be as under:
Sr.No. Taxable securities transaction New rate from
01.06.2016 Payable by
A B C D
a Sale of an option in securities 0.05 per cent Seller
b Sale of an option in securities, where option is exercised 0.125 per cent Purchaser
c Sale of a futures in securities 0.01 per cent Seller
Value of taxable securities transaction relating to an “option in securities” shall be the option premium, in case of sale of an option in securities.
The STT for exercised ITM option buy positions increases to 0.125%(from 0.05%) on the entire contract value [(premium+strike price)*qty] payable while selling.
The STT for exercised buy future positions remains 0.01% of the contract value (future price*qty) which is the same charge applicable for futures sold anytime during its contract cycle. So no, there is no higher STT or any other increase in charges for exercised futures.