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ARTICLE AD BOX
Securities Transaction Tax (STT) connected derivatives volition emergence from April 1, 2026, aft the Finance curate Sithraman successful her 9th fund code projected higher rates connected futures and options trading arsenic portion of Budget 2026 changes to the Finance (No.
2) Act, 2004.Finance Minister Nirmala Sitharaman announced the determination portion presenting the Budget, saying: “I suggest to rise the STT connected Futures to 0.05 percent from contiguous 0.02 percent. STT connected options premium and workout of options are some projected to beryllium raised to 0.15 percent from the contiguous complaint of 0.1 percent and 0.125 percent respectively.”The alteration comes done Clause 143 of the Finance Bill, which amends Section 98 of IT Act, which govern STT rates connected derivatives transactions.
The revised rates volition use from the taxation twelvemonth 2026-27 onwards.Its is important to enactment that lone derivatives STT rates person been revised from April 1, 2026, portion equity transportation and equity communal money STT rates stay unchanged
What is Securities Transaction Tax (STT)
STT is simply a transaction-based taxation levied connected the acquisition oregon merchantability of specified securities traded connected recognised banal exchanges.It is not based connected nett oregon income. Instead, it is charged astatine the clip of executing the transaction itself. The taxation is collected automatically by the speech oregon intermediary and deposited with the government. "Taxable securities transaction" means a transaction of—
| (a) | purchase oregon merchantability of an equity stock successful a institution oregon a derivative oregon a portion of an equity oriented money [or a portion of a concern trust], entered into successful a recognised banal exchange; or | |
| [(aa) | sale of unlisted equity shares by immoderate holder of specified shares nether an connection for merchantability to the nationalist included successful an archetypal nationalist connection and wherever specified shares are subsequently listed connected a recognised banal exchange; or] | |
| [(ab) | sale of unlisted units of a concern spot by immoderate holder of specified units which were acquired successful information of a transportation referred to successful clause (xvii) of conception 47 of the Income-tax Act, 1961 (43 of 1961) nether an connection for merchantability to the nationalist included successful an archetypal connection and wherever specified units are subsequently listed connected a recognised banal exchange; or] | |
| (b) | sale of a portion of an equity oriented money to the [Mutual Fund; or | |
| (ba) | sale oregon surrender oregon redemption of a portion of an equity oriented money to an security company, connected maturity oregon partial withdrawal, with respect to portion linked security argumentation issued by specified security institution connected oregon aft the 1st time of February, 2021;] |
How the instrumentality defines taxable securities transactions
Under the statutory framework, a taxable securities transaction includes:
- Purchase oregon merchantability of equity shares
- Trading successful derivatives specified arsenic futures and options
- Sale of equity-oriented communal money units
- Transactions involving concern spot units (REITs, InvITs)
- Certain IPO and offer-for-sale transactions
- Certain ULIP-linked equity money redemptions
The instrumentality besides defines cardinal derivative concepts specified arsenic enactment premium, onslaught terms and intrinsic value, forming the ineligible basal for STT levy.
Clause 143 of Finance measure 2026 : What precisely is changing
Clause 143 increases STT rates connected 3 derivatives segments:
| Segment | Old rate | New complaint (from April 1, 2026) |
| Options premium | 0.1% | 0.15% |
| Options exercise | 0.125% | 0.15% |
| Futures trading | 0.02% | 0.05% |
These revised rates use from April 1, 2026, and volition interaction trades executed successful FY 2026-27 and beyond.
Updated STT rates array (Post Budget 2026 revisions)
The array highlights successful bold lone the segments wherever complaint changes use for clarity, remainder are unchanged.
| Sl No | Transaction | STT Rate (From Apr 1, 2026) | Payable by |
| 1 | Purchase of equity shares (delivery) | 0.1% | Buyer |
| 2 | Sale of equity shares (delivery) | 0.1% | Seller |
| 2A | Sale of equity communal money units (delivery) | 0.001% | Seller |
| 3 | Sale of equity shares (non-delivery / intraday) | 0.025% | Seller |
| 4(a) | Sale of options (premium value) | 0.15% | Seller |
| 4(b) | Sale of options (when exercised) | 0.15% | Buyer |
| 4(c) | Sale of futures | 0.05% | Seller |
| 5 | Sale of equity communal money units to MF | 0.001% | Seller |
| 5A | ULIP-linked equity money redemption | 0.001% | Seller |
| 6 | OFS merchantability of unlisted shares (later listed) | 0.2% | Seller |
| 7 | OFS merchantability of unlisted concern spot units | 0.2% | Seller |
Note: Only derivatives STT rates change. Equity transportation and communal money STT stay unchanged.
Who really pays STT
STT liability depends connected the transaction type:
- Equity acquisition -- Buyer pays
- Equity sale-- Seller pays
- Options premium --Seller pays
- Options exercise--Buyer pays
- Futures-- Seller pays
The taxation is deducted automatically by the broker oregon exchange, truthful traders bash not request to cipher oregon wage it separately.
Key ineligible definitions down STT levy
The STT model relies connected statutory definitions drawn from aggregate fiscal laws.
Important presumption defined successful law
- Derivative – As defined nether the Securities Contracts (Regulation) Act
- Option successful securities – A declaration giving the close (not obligation) to bargain oregon sell
- Option premium – Price paid by purchaser to enactment seller
- Strike terms – Price astatine which enactment tin beryllium exercised
- Recognised banal speech – Exchange recognised nether securities law
- Business spot – Includes REITs and InvITs
- Equity oriented money – Funds with prescribed equity vulnerability nether taxation law
What counts arsenic taxable securities transaction legally
The instrumentality defines taxable securities transactions to include:
- Exchange-traded equity stock acquisition oregon sale
- Derivatives trading connected recognised exchanges
- Sale of equity communal money units
- ULIP equity money redemption (post Feb 2021 policies)
- IPO and archetypal connection OFS transactions successful circumstantial cases
Why the authorities is raising STT connected derivatives
While the Budget code did not elaborate extensively, the concern ministry successful station fund property league highlighted pursuing points:
- Increasing high-volume derivatives trading
- Moderating speculative trading activity
- Aligning derivatives taxation with GDP size
Derivatives trading volumes successful India person expanded sharply successful caller years, peculiarly successful retail participation.
What this means for traders
For derivatives traders:
- Trading costs volition summation marginally
- High-frequency traders volition spot cumulative outgo impact
- Delivery equity investors stay unaffected
For semipermanent investors who chiefly bargain and clasp equities, determination is nary alteration successful STT cost.
Bottom line
From April 1, 2026, STT volition go costlier for futures and options traders owed to revised statutory rates nether Clause 143 of the Finance Bill. However, the halfway STT structure, equity transaction taxes and communal money STT stay unchanged.
