Budget Proposes Hike in Securities Transaction Tax on Futures and Options [Read Finance Bill 2026]

The Union Budget for the Financial Year 2026–27 was presented by Finance Minister Nirmala Sitharaman in the Lok Sabha on Sunday, February 1, 2026, with the government proposing an increase in the Securities Transaction Tax (STT) on futures and options trades through the Finance Bill, 2026.

As per the Budget proposals, the STT on futures transactions will be increased to 0.05 percent from the existing 0.02 percent. In the case of options, the tax on options premium will be raised to 0.15 percent from 0.1 percent, while the STT on exercise of options will be increased to 0.15 percent from the current 0.125 percent.

🔍 What changed after the Budget speech? The answer is in the notifications | Click Here

The Finance Minister said the revision in STT rates forms part of the government’s broader effort to rationalise taxes in the capital markets while ensuring a fair contribution from high-volume trading segments. Futures and options account for a significant share of daily trading volumes in Indian stock markets.

The increase in STT is expected to raise transaction costs for derivatives traders, particularly high-frequency and short-term participants. Market participants noted that the change may have a greater impact on active traders who rely on frequent trades with thin margins.

The government, however, maintained that the revised rates remain moderate and aligned with the objective of maintaining market integrity while mobilising revenue. The Budget did not announce any change in STT on equity delivery transactions.

The proposed hike will come into effect from a date to be notified after the enactment of the Finance Bill, 2026. The move adds to the list of tax changes announced in Budget 2026, which include reforms in direct taxes, customs duties, and compliance procedures.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates