Intraday vs Delivery vs BTST vs STBT: trading types explained

Why product type matters

In Indian equity markets, the product type you select when placing an order determines three critical things: how long you can hold the position, how much capital you need to put up, and how the trade is taxed. Choosing the wrong product type is one of the most common and costly beginner mistakes — and some of the consequences are not immediately obvious.

Delivery (CNC): owning shares overnight

Delivery trading — also called CNC (Cash and Carry) in most Indian broker platforms — is the most straightforward way to buy shares. You pay the full price of the shares using your own funds (no leverage), and after T+1 settlement, the shares are credited to your demat account where they sit until you decide to sell them.

There is no time pressure on a delivery holding. You can hold a stock you bought via CNC for one day, one year, or one decade. As long as the shares are in your demat account, they are yours. You are entitled to dividends, bonus shares, stock splits, rights issues, and corporate actions that occur during your holding period.

Capital requirement: The full purchase value. There is no margin for CNC — you must have the complete amount in your trading account before placing the order. This is by design: SEBI does not permit leverage for delivery equity purchases in the cash segment.

STT (Securities Transaction Tax): For delivery transactions, STT is charged at 0.1% of the transaction value on both the buy side and the sell side separately. This is higher than the intraday STT rate, which applies only on the sell side.

Tax treatment: If you sell delivery shares held for more than one year, the gain is taxed as Long-Term Capital Gain (LTCG) at 12.5% (above the ₹1.25 lakh annual exemption, effective from the 2024 Union Budget). If you sell within one year of purchase, the gain is taxed as Short-Term Capital Gain (STCG) at 20%. You can use our LTCG calculator to estimate your tax liability on delivery trades.

Intraday (MIS): squared off the same day

Intraday trading — product type MIS (Margin Intraday Square-off) — means you open and close a position within the same trading session. You might buy shares at 10:30 AM and sell them at 1:45 PM, or short-sell at 11:00 AM and cover at 3:15 PM. You never actually receive the shares in your demat account — the position is settled purely on the difference between your entry and exit price.

If you do not close an MIS position yourself, the broker's risk-management system will auto-square off the position shortly before market close — typically between 3:15 PM and 3:20 PM IST. This auto-square-off happens regardless of whether the position is profitable or showing a loss. Some brokers charge an additional fee for auto-square-off orders.

Capital requirement:Intraday orders require only a fraction of the full trade value as margin. Post SEBI's 2021 peak margin norms, brokers can offer up to 5x leverage for intraday equity in the cash segment, though actual leverage offered varies. Using leverage means a 1% adverse move in the stock could translate to a 5% loss on your capital — leverage amplifies both gains and losses symmetrically.

STT: For intraday trades, STT applies only on the sell side at 0.025% of turnover — significantly lower than the delivery STT rate.

Tax treatment: Profits from intraday equity trading are classified as speculative business income under the Income Tax Act. This means they are taxed at your applicable income tax slab rate (not the concessional STCG rate). They cannot be offset against salary income, but speculative losses can be carried forward and offset against speculative income for up to four assessment years. Intraday trading income is considered business income, so you may also be required to file an ITR-3 and maintain books of accounts if your trading volume crosses certain thresholds.

Brokerage differences

Brokerage structures differ between delivery and intraday:

• Flat-fee discount brokers (Zerodha, Upstox, etc.) typically charge zero brokerage for CNC delivery trades and ₹20 per order (or 0.03% of turnover, whichever is lower) for MIS intraday trades.
• Traditional full-service brokers typically charge a percentage of turnover for both delivery and intraday, with delivery rates often higher than intraday rates.

Use our brokerage calculator to model the total cost of a trade — including brokerage, STT, exchange charges, SEBI turnover fees, GST, and stamp duty — across different brokers and product types. Total transaction costs for high- frequency intraday trading can add up more quickly than they appear on a per-trade basis.

BTST: Buy Today Sell Tomorrow

BTST (Buy Today Sell Tomorrow)is a trading strategy that sits in between delivery and intraday. You buy shares today (in the delivery/CNC segment), and sell them the next trading day — before the T+1 settlement cycle has credited those shares to your demat account. The shares are "in transit" in the settlement pipeline when you sell them.

Most brokers permit BTST trades. The mechanics work because the stock exchange settlement system allows you to create an early pay-in obligation against your expected credit. In practice, for highly liquid large-cap stocks, BTST rarely causes problems. However, there is a small but real risk specific to BTST:

If the person who originally sold you the shares on Day 0 fails to deliver those shares by settlement time, and you have already sold those shares on Day 1, you may face a short delivery situation. In that case, the clearing corporation will conduct an auction to source the shares, and you may receive the proceeds at the auction price — which could be higher or lower than what you planned. This risk is very low for liquid large-caps but becomes more relevant for mid- and small-cap stocks with thinner trading.

Tax treatment for BTST: BTST trades involve buying and selling within two calendar days. SEBI and the income tax treatment of BTST has been a grey area, but the general practice is to treat BTST profits as STCG (since the holding period is under a year). The key point: because the shares were briefly in the delivery pipeline, they are generally not classified as speculative intraday income — they retain the STCG treatment at 20%.

STBT: Sell Today Buy Tomorrow — and why it is no longer viable

STBT (Sell Today Buy Tomorrow) is the mirror image of BTST: you short-sell shares today and close the position the following day. In theory, this allows you to profit from a one-day decline without the time pressure of intraday square-off.

In practice, STBT is no longer a viable strategy for retail investors in India under the current T+1 settlement regime for the following reason: in the cash equity segment, you can only sell shares that are in your demat account. Short-selling in the cash segment without pre-owning the shares is not permitted for retail investors (it is available only to institutional participants through a formal Securities Lending and Borrowing — SLB — mechanism).

Under the older T+2 settlement, there was a brief window where some brokers offered STBT-like products. Under T+1, that window has effectively closed for the cash segment. Retail investors who want short exposure must use derivatives — specifically futures or options contracts — which operate under a different framework entirely.

Margin requirements: a practical comparison

Understanding what capital you need for each trade type is critical before you place an order:

• CNC (Delivery): 100% of the trade value. No leverage. You must have ₹1,00,000 in your account to buy ₹1,00,000 worth of stock.
• MIS (Intraday): Varies by broker and SEBI margin norms, but typically 20–50% of trade value (implying 2x–5x leverage). To trade ₹1,00,000 worth of stock intraday, you might need ₹20,000–₹50,000 in your account, depending on the broker and the specific stock.
• BTST: Same as CNC — full payment required upfront since it is technically a delivery trade initiated today.
• Futures (for comparison): Requires an initial margin (SPAN + Exposure) of roughly 10–20% of contract value for index futures, and higher for stock futures. This is set by SEBI and the exchanges, not individual brokers.

Risks of each product type

Delivery (CNC) risks: The primary risk is capital loss if the stock price falls. Because there is no leverage and no forced square-off, you retain full discretion over when to exit. The risk is that a falling stock can be held indefinitely, sometimes preventing rational decision-making.

Intraday (MIS) risks: Leverage amplifies losses. A 5x leveraged intraday position can lose your entire invested capital on a 20% adverse move — which, while unusual for large-caps in a single session, is not impossible during circuit-breaker events. The forced auto-square-off means you have no option to wait out a temporary adverse move. Emotional decision-making under intraday pressure is a major contributor to retail losses.

BTST risks: Short delivery risk (explained above), plus the normal overnight price risk that any delivery holder faces. If negative news breaks overnight between your buy day and your intended sell day, you will face that gap-down at opening with no intraday protection.

Summary: tax treatment at a glance

• Delivery held > 1 year: LTCG at 12.5% (₹1.25 lakh annual exemption).
• Delivery held ≤ 1 year (including BTST): STCG at 20%.
• Intraday cash equity (MIS): Speculative business income, taxed at slab rate.
• F&O trading (futures and options): Non-speculative business income (even if day-traded), taxed at slab rate. F&O losses can be set off against most other business income, unlike speculative losses. Note: F&O is a separate segment not covered in depth here.

Tax rules in India change with each Union Budget. The rates above reflect the position as of Budget 2024. Always verify current rates with a qualified tax professional or the Income Tax Department's official resources before filing.

Where to go from here

Once you understand the mechanics of how trades are classified and settled, the next step is to understand the full cost of trading. Use our brokerage calculator to see exactly how much a given trade costs you across brokerage, STT, exchange charges, and taxes. You might also want to read about NSE vs BSE to understand the exchange and settlement infrastructure, and about Rupee Cost Averaging if you are thinking about a long-term delivery-based accumulation strategy.

This article is educational only and does not constitute investment advice. Stock markets carry risk, including the loss of principal. Past performance is not indicative of future results. Tax rules may change; consult a qualified tax professional for personalised advice. Please consult a SEBI-registered adviser before making any investment decision.