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The Indian government has increased the securities transaction tax (STT) on the sale of future and option contracts by up to 25%, according to amendments made to the Finance Bill, 2023.
The STT, introduced in 2004, is charged on transactions involving different types of securities through the stock exchange route, including equity or equity derivatives transactions, and mutual fund transactions.
The STT for intraday trades is charged at 0.025% on the sell side, while for delivery transactions, it is charged at 0.1% on both the buy and sell sides. The new amendments mean that STT on the sale of options has been hiked by 23.5% from Rs 1,700 to Rs 2,100 on a turnover of Rs 1 crore.
For futures contracts, the STT has been increased by 25% from Rs 1,000 to Rs 1,250 on a turnover of Rs 1 crore. The amendments were passed without discussion in Lok Sabha.
The National Stock Exchange (NSE) has also withdrawn the Do Not Exercise (DNE) facility for options traders from March 30, which allowed traders to auto-square off their positions to prevent risks around the physical settlement.
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