The deduction of Securities Transaction Tax on trade in equities will come into force in major bourses from October 1.

"There will be no delay and the necessary software is being installed in stock exchanges for automatic deduction of STT when shares are traded," official sources said.

Sources said installing the software posed no problem.

The Budget had originally proposed 0.15 per cent STT on all securities transaction. But Finance Minister P Chidambaram later reduced the tax for day traders and arbitraguers at 0.015 per cent and exempted bonds and debt mutual funds from it.

Announcing differential rates of the new STT in July, he retained the tax for delivery-based trade in equity but split the levy equally at 0.075 per cent between buyer and seller.

Chidambaram also pegged the tax at 0.01 per cent for derivative traders in futures and options.

Further amending the Finance Bill, Chidambaram clarified that purchaser and sellers of equity shares or equity mutual fund units would have to pay STT at 0.075 per cent each if the contract is settled by actual delivery or transfer of shares.

If the shares or MF units are not settled by actual delivery or transfer of shares, the seller would have to pay STT at 0.015 per cent. Sale of an equity mutual fund would also attract STT at 0.15 per cent for the seller.