More Stories

Informist, Thursday, Feb. 5, 2026

 

--CBDT head:Can't forcefully bar F&O trading, made it costly to deter volume

--CBDT head: Retail investors may review, rethink F&O trading if costs high

--CBDT head: May top FY26 direct tax mop-up target via 'nudge' campaign

 

By Priyasmita Dutta and Sagar Sen 

 

NEW DELHI - 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), made another attempt to regulate the volume and prevent unsophisticated retail investors from losses. The government cannot "force" retail participants to not enter the equity futures and options segment, and can only deter them by making it a "bit costly", Ravi Agrawal, chairman of Central Board of Direct Taxes, told Informist in an interview. 

 

"We cannot force them to not enter. It is the choice of the citizen to actually spend the money in a manner that he or she prefers to," Agrawal said. "The only thing is that maybe if you make it a bit costly, people may take a call, may review as to whether it's really worthwhile for them to undertake that transaction," he said.

 

Finance Minister Nirmala Sitharaman, in her ninth Budget Sunday, proposed raising the securities transaction tax on futures contract 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 equity market, which was open on Sunday, was hugely disappointed with the move, and the benchmark Nifty 50 index fell 3% intraday. The Nifty 50 saw the sharpest fall on a Budget Day since 2020 and the steepest single-day fall in nine months.

 

According to the Income Tax Department, the total volume of transaction in options and futures in 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 said in a tweet Sunday. 

 

Agrawal said the increase in cost from higher taxes may dissuade retail investors from investing in the speculative trade segment, where many have already burnt their fingers in the last few years. "So suppose a person has already incurred losses, you increase the cost...the person may deploy the fund somewhere else," he said. 

 

Below are the edited excerpts of the interview: 

 

Q. The government had hiked STT on futures and options trading in the past as well. Did it yield the desired results?'

A. We do not have data as such, of likely impact it would have had. If suppose in absolute terms, the transactions come down, we can definitely say that yes it had an impact. But if the transactions go up, then to what extent it had an impact, it would be difficult to say. So, its very difficult to answer that question. 

 

Q. A lot of retail investors have already lost money in speculative trading and yet they participate in the segment. What makes you believe higher STT will deter participation?

A. We cannot force them to not enter. It is the choice of the citizen to actually spend the money in a manner that he or she prefers to. The only thing is that maybe if you make it a bit costly, people may take a call, may review as to whether it's really worthwhile for them to undertake that transaction.

 

Because ultimately, why is a person doing the transaction? Because the person can potentially get some benefit out of it, some income out of it. But increase the cost, it may dissuade the person. So suppose a person has already incurred losses, you increase the cost...the person may deploy the fund somewhere else. The family may also persuade the person to actually put the fund somewhere else.

 

Q. The FY27 Budget cut the projection for collections from STT in FY26, but projected healthy collection target for FY27. What was the reason for the optimism?

A. The next year's nominal GDP growth projection is 10% as against 8% this year. Naturally, if the GDP is growing at 10%, the collection has to go up commensurately. This year, with normal GDP of 8%, the percentage growth of collections is 8.75% with a tax buoyancy of 1.09. Next year the GDP growth is projected at 10% with a tax buoyancy of similar order. We would get the percentage increase of more than 11%.

 

Q. The government had imposed 1% tax collected at source over luxury purchase above INR 1 million to identify income mismatches, did it yield results?

A. The inherent idea is that if you collect tax on a particular item, and that is reflected in the AIS (Accounting Information System) ledger of that person, it will incorporate that transaction while declaration of income. To that extent, it helps in incorporating that data in income tax filing. 

 

And in cases income has not been correctly disclosed, there 'NUDGE' campaigns will help. We identify such cases and then communicate with the persons through different means. We provide opportunity to that person to correct whatever mistakes have been done. Through 'NUDGE' campaign, about 11.1 million updated returns have been filed in two years. Till Jan. 31, people paid about INR 88 billion of tax due to revision in their filing. 

 

Q. Will the ongoing 'NUDGE' campaign lead to higher collections in FY26? What kind of additional revenue are you expecting in Jan-Mar FY26 from the updated return filing under the campaign?

A. Our FY26 revised estimate of INR 24.21 trillion from direct taxes takes into account the additional revenue we may get from 'NUDGE' campaign. We can exceed the estimate also. 

 

Q. Any estimate by how much you can exceed the target for FY26?

A. No, we will have to see. We will meet the target for sure, there will be advanced tax installment in Mar. 15 and tax deducted at source paid in February will also be substantial. 

 

Q. Will you give permission to more public sector companies to raise funds through 54EC Bonds and zero-coupon bonds? 

A. No, nothing new is on the table. Whatever we have already done, that is all. End 

 

Edited by Akul Nishant Akhoury

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd. by NSE Data & Analytics Ltd., a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt. Ltd.

 

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2026. All rights reserved.