BT40 Morse Taper holder are used to hold Tang type shanks 

BT40 morse taper Is mainly used to hold Tang Type Drills and Arbours  

• Better shank taper - accurate, rigid toolholder-to-spindle mount
• Less tool wear and replacement - less scrap
• Fully ground flange and V-groove, easy on the tool changers for less spindle and changer maintenance

Made from alloy steel hardened to 54 – 56rc
Balanced to G6.3 at 12,000 rpms
Concentricity is less than .005 micron upto 100 Length and 0.012 upto 200 Length
All critical tool holder surfaces precision ground
Rear thread for pull stud is M16 X 2.0

This is general standard to choose morse taper size for drills (it may change with different din standard or special sizes) 

MT 1 IS USED FOR SMALL DRILL UPTO 14MM
MT 2 IS USED FOR 14.25 MM TO 23 MM
MT 3 IS USED FOR 23.5 TO 31.5 MM
MT4 IS USED FOR 32TO 49.5MM3