Securities Transaction Tax (STT)
Concept and Policy Purpose
Securities Transaction Tax (STT) is a direct tax levied on every purchase or sale of securities listed on a recognised stock exchange in India. Introduced in the Finance Act 2004 (replacing the long-term capital gains tax on equities at that time), STT is collected at source by the stock exchange. It applies to equity shares, derivatives (futures and options), equity-oriented mutual fund units, and ETFs. STT is distinct from capital gains tax, which is separately levied on profits from securities transactions. By raising STT on derivatives, the Budget 2026-27 intends to moderate retail participation in speculative futures and options trading — a segment that the SEBI-commissioned study (2023) found resulted in losses for 90%+ of individual traders.
- STT introduced: Finance Act 2004 (under Finance Minister P. Chidambaram)
- Budget 2026-27 changes: STT on futures raised 0.02% → 0.05%; STT on options premium raised 0.1% → 0.15%; STT on option exercise 0.125% → 0.15%
- Effective from: 1 April 2026
- STT collected by: Recognised stock exchange (BSE, NSE) and remitted to government
- SEBI 2023 study: ~90% of individual F&O traders incurred losses (₹1.81 lakh crore aggregate losses in 3 years)
- Policy rationale: Curb speculative excess in derivatives; redirect retail savings to productive investment
● Tracked since February 01, 2026 · last seen June 18, 2026 · updates as the daily brief publishes