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Informist, Tuesday, Apr. 7, 2026

 

--Fin min sources: Govt not planning to roll back hike in STT on F&O trades

 

By Sagar Sen and Priyasmita Dutta

 

NEW DELHI – The finance ministry is not planning to review the hike in securities transaction tax on futures and options transactions in the near future, two senior officials said. "We raised the STT to regulate trading volume in the derivatives segment and discourage speculative trading. There is no plan for bringing it down," one of the officials told Informist.

 

The government has been keeping an eye on the ballooning trade volumes in the equity futures and options segment and in the Budget for 2026-27 (Apr-Mar), it made another attempt to regulate the volume and prevent unsophisticated retail investors from incurring losses.

 

In the Budget for FY27, the government raised the securities transaction tax on futures transactions to 0.05% from 0.02% and that on options premium and exercise of options to 0.15?ch from 0.1% and 0.125%, respectively. The new tax rates came into effect from Apr. 1.

 

The government had first increased the securities transaction tax rate on options to 0.1% of the option premium from 0.0625% and on futures to 0.02% of the price of futures from 0.0125% in the Budget for FY25.

 

"We are not against it and respect the activity that takes place. But how can government keep quiet when we see losses to such small investors," Finance Minister Nirmala Sitharaman had said after presenting the Union Budget on Feb. 1. "So, this nominal increase is aimed purely at high speculation. Only to deter them."

 

Ashish Kumar Chauhan, managing director and chief executive officer of the National Stock Exchange of India Ltd. had raised concerns over fall in trading volume in futures and options after the hike in securities transaction tax. According to media reports, a leading stockbrokers' association had also approached the government to defer the increase in the tax.

 

"We receive many such requests, it doesn't mean the government will change its stance. The government has already expressed its stance by hiking STT, and we will stick to it," a second official said.

 

The official added that the government wants continuity in tax policy and stability. "Rolling out a change and then rolling that back only sparks more confusion," the official said.

 

According to the Income Tax Department, the total volume of transactions in options and futures is more than 500 times of India's GDP. "In rupee terms, our GDP is INR 300 lakh crore (INR 300 trillion), and volume for options and futures is more than INR 1.5 lakh lakh crores (INR 150,000 trillion)," the department had said in a tweet on Feb. 1.  End

 

Edited by Vandana Hingorani

 

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