STT Hike From April 1, F&O Traders Face Higher Costs As Options STT Rises To 0.15%

Mumbai: The National Stock Exchange (NSE) issued a circular on March 31 announcing changes in Securities Transaction Tax (STT), effective from April 1, 2026. The revision follows updates under the Finance Act, 2026 and mainly impacts derivatives trading.

What Has Changed?

The biggest impact will be on Futures & Options (F&O) traders. STT on option selling has been increased from 0.10 percent to 0.15 percent. For exercised options, the tax has also gone up from 0.125 percent to 0.15 percent.

In futures trading, STT has been raised from 0.02 percent to 0.05 percent. This means that every trade in the derivatives segment will now become more expensive.

Relief For Equity Investors

There is no change for investors dealing in the cash market. STT on equity delivery trades remains unchanged at 0.1 percent.

Similarly, STT on the sale of equity mutual fund units continues at 0.001 percent. This means long-term investors and mutual fund holders will not be significantly affected by the new rules.

Why Has STT Been Increased?

The government aims to control excessive trading activity in the derivatives segment and increase tax collections.

In recent years, retail participation in F&O trading has grown sharply, raising concerns about higher risks for small investors.

Impact On Traders

Active traders, especially those doing intraday and options trading, will face higher costs. Frequent trading may now reduce profit margins.

Small traders may find it harder to break even, as costs increase with each trade. Experts suggest focusing on fewer but better-quality trades instead of frequent transactions.

When Will It Apply?

The revised STT rates will come into effect from April 1, 2026, and apply to all relevant stock market transactions.