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The Government of India, through the Finance Bill 2026, has proposed an increase in Securities Transaction Tax (STT) for derivatives transactions, including futures and options in securities. STT, first introduced under the Finance (No. 2) Act, 2004, plays a crucial role in the Indian financial syst
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FAQ :
STT is a tax introduced in India to ensure efficient tax collection on specified securities traded through recognised market infrastructure like stock exchanges.
The revision is intended to regulate speculative trading in the growing derivatives market, ensure fair trading practices, reduce excessive risk-taking, and maintain market stability.
The STT rate for the sale of options in securities will increase from 0.1% to 0.15% of the option premium. For the sale of exercised options, it will rise from 0.125% to 0.15% of the intrinsic price.
The STT rate for the sale of futures in securities will increase from 0.02% to 0.05% of the traded price.
The revised STT rates will be effective from April 1, 2026, and will apply to all futures and options transactions executed on or after this date.
Investors and traders in the derivatives segment can expect a slight increase in transaction costs. The changes are designed to promote long-term market stability and responsible trading behaviour.
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