News

STT charges on Future and Options increased: Futures and options trading costs are set to rise after the Union Budget announcement. Finance minister Nirmala Sitharaman said the Securities Transaction Tax (STT) on futures trades will be increased sharply.

The STT on futures has been raised to 0.05 per cent from 0.02 per cent, a 2.5-times hike.

The higher levy will directly raise trading costs for active derivatives participants.

On a Rs 10 lakh monthly F&O turnover, STT cost rises

Earlier: Rs 200

Now: Rs 500

Extra cost: Rs 300 per month

For high-frequency traders, the impact will be far larger as costs compound with volume.

The tax hike is expected to hurt multiple stakeholders.

Active F&O traders: Higher transaction costs reduce profitability

Brokers: Volumes may fall as traders turn cautious

Exchanges: Derivatives activity on BSE and NSE could see moderation

The move signals the government’s intent to cool aggressive retail participation in derivatives. Policymakers have repeatedly flagged concerns around speculative trading and retail losses in the F&O segment.

By making derivatives trading more expensive, the government is attempting to discourage short-term gambling-like behaviour, without imposing direct restrictions.

If you trade futures frequently, your costs are now higher. Strategies that relied on thin margins may need recalibration. Long-term investors, however, remain largely unaffected by this change.