STT Hike Explained: Why Government Raised F&O Taxes Spooking Indian Markets
Business
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News18•01-02-2026, 16:31
STT Hike Explained: Why Government Raised F&O Taxes Spooking Indian Markets
- •Revenue Secretary Arvind Shrivastava stated the STT hike on F&O aims to discourage speculation and manage systemic risk in derivatives.
- •The Union Budget 2026-27 proposes increasing STT on futures from 0.02% to 0.05%, and on options premium/exercise to 0.15% from 0.1%/0.125%.
- •The government believes heavy speculation in F&O often leads to losses for small investors, making the hike a measure to curb this.
- •Indian equity markets, including Sensex and Nifty 50, experienced a sharp sell-off after the STT hike announcement in the Budget.
- •Experts suggest the hike will increase transaction costs for derivatives traders, potentially leading to lower volumes and near-term market volatility.
Why It Matters: The government increased STT on F&O to curb speculation and systemic risk, causing a market sell-off.
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