Govt Says No Review of STT Structure; F&O Volumes Rise Despite Budget Tax Hike

The government has no proposal to review the existing Securities Transaction Tax structure, Minister of State Pankaj Chaudhary said in reply to a question the Lok Sabha on Monday.

The Union Budget for 2026-27 had sharply raised STT on futures and options as part of what the government described as a “reasonable course correction” in the derivatives market and a measure to raise additional revenue. The tax on sale of futures was increased to 0.05% of the traded price from 0.02%, while STT on sale of options was raised to 0.15% of the option premium from 0.10%. The rate on exercised options was also increased to 0.15% of the intrinsic price from 0.125%. The revised rates came into effect from April 1.

The higher transaction tax, however, does not appear to have resulted in a decline in derivatives trading volumes, according to an analysis cited by the government.

“Following the increase in STT (from) April 1, an analysis of NSE Year on Year data indicates that total volume across all categories of market participants remained significantly higher at 16.2%,” the government said.

The National Stock Exchange accounted for 91.6% of overall futures and options turnover in 2025-26, based on futures turnover and options premium turnover combined.

The government did not provide a separate assessment of the impact on retail investors or small traders.