STT hike on futures and options from April 1, long-term impact limited

NEW DELHI: With the FY26 fiscal set to end on Tuesday, investors are gearing up for several reforms, including revised Securities Transaction Tax (STT) rules that will come into effect from April 1.

Many brokers, traders and demat account holders are concerned about the sharp increase in STT on futures and options (F&O) trades, following revisions announced by Finance Minister Nirmala Sitharaman in the Union Budget FY26-27. She had also proposed a significant increase in charges on options.

STT on futures has been raised to 0.05 per cent from 0.02 per cent earlier.

Similarly, STT on options premium and exercise has been increased to 0.15 per cent from the current rates of 0.10 per cent and 0.125 per cent, respectively.

According to experts, the increase in STT -- particularly in the derivatives segment -- is likely to act as a marginal negative for foreign portfolio investor (FPI) flows in the near term, especially for high-frequency and derivative-focused global funds.