The government hiked the securities transaction tax on equity futures to 0.05% from 0.02%. Following the announcement, shares of BSE and stockbrokers, including Angel One, tumbled.

Tax on stock derivatives trading raised; Nifty slides nearly 3%, BSE tumbles

India Hikes Securities Transaction Tax on Equity Futures

The Indian government has announced a hike in the securities transaction tax on equity futures from 0.02% to 0.05%. Shares of BSE and stockbrokers, including Angel One, have tumbled following the announcement.

Tax Hike Aimed at Curbing Speculative Trading

India has raised taxes on some equity transactions in an effort to further stem speculative trading by retail investors. The government has increased the securities transaction tax on equity futures to 0.05% from 0.02%, and the tax on options premium and on the exercise of options has been increased to 0.15% from 0.1%.

Stock Market Reaction

The announcement sparked a sharp decline in stocks, with the main NSE Nifty 50 Index slumping nearly 3% in intraday trading.
Shares of the BSE — India’s second-largest stock exchange — and stock brokers including Angel One tumbled.

Regulatory Measures

The regulator introduced several curbs in late 2024, including limiting the number of weekly index options contracts per exchange to one.

Industry Reaction

"The steep increase in STT could cool derivative activity and lead to a reduction in volumes," said Shripal Shah, managing director at Kotak Securities Ltd. "The intent appears to be volume moderation rather than revenue maximisation."

Background

India has become the world's top destination for retail traders, with an influx of new investors. The government's move aims to curb speculative trading and reduce the risk of market volatility.

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