In a devastating blow to merchants, the Central Government has raised the securities transaction tax on the sale of Futures and Options (F&O) contracts by a substantial 25%.
Centre’s decision to increase STT on F&O contracts leaves traders reeling
The amendments to the Finance Bill 2023 have resulted in an increase in STT on the sale of options to Rs 2,100 on a turnover of Rs 1 crore compared to the earlier levy of Rs 1,700, indicating a significant 23.5% increase. Additionally, STT on the sale of futures contracts has been raised to Rs 12,500 on Rs 1 crore of turnover compared to the previous charge of Rs 10,000, indicating a steep 25% hike.
STT, introduced in 2004, is imposed on transactions involving various types of securities. All stock market transactions involving equity or equity derivatives, such as futures and options, are subject to STT, as are mutual fund transactions.
According to Manish Shah, a SEBI-registered investment advisor and trader, “It is a double whammy. First, NSE removed the ‘do not exercise’ option. Now, STT has been hiked. It is a retrograde step when markets are going through a turmoil.”
