- Finance Minister Nirmala Sitharaman has ruled out an immediate cut in securities transaction tax.
- Sitharaman acknowledged the ongoing market debates over taxing different asset classes.
- The real question is whether India’s next budget will address transaction costs faced by active traders.
On October 13, 2026, Finance Minister Nirmala Sitharaman declined to commit immediately to cutting the Securities Transaction Tax (STT) or changing the Long-Term Capital Gains (LTCG) tax, while acknowledging the ongoing debate over taxing different asset classes.
The key question now is whether India’s next Union Budget will address transaction costs and offer some relief to active stock-market traders.
Why the Finance Minister Ruled Out an Immediate STT Cut
Finance Minister Nirmala Sitharaman, speaking at the Bloomberg New Economy Forum in New Delhi, has refrained from making immediate commitments to cut the STT. She said, “We are very close to the budget, and the preparation for the budget has started, and it may not be the best time for me to say what I will or what I will not consider. So, I’ll tread cautiously on that.”
Meanwhile, Sitharaman acknowledged that LTCG tax, STT, and the question of treating different asset classes similarly remain subjects of active debate among domestic and foreign investors. She described the discussion as “healthy” and said she was keen to hear stakeholders’ views during the Budget consultation process.
The FM also recalled that the government had moved different asset classes towards a more uniform tax treatment two years earlier. Although some saw the move as a tax hike, she said the idea was to ensure parity across asset classes, not to increase taxes.
Why Transaction Costs Matter More to Active Traders
For investors who hold stocks for long-term periods, STT is a relatively small one-time cost, while for active stock market traders the situation is very different. Intraday and F&O traders execute multiple round-trips every day or week. All trades attract STT, brokerage, exchange fees, GST, and stamp duty. These taxes can compound rapidly.
That said, even a small percentage becomes meaningful when multiplied across high turnover. Thin-margin strategies such as scalping, high-frequency directional trades, or option selling are particularly sensitive. A few basis points of extra expenditure can make what is a profitable advantage a break-even or unprofitable venture. That is why transaction taxes are more important to an active trader than a passive or long-term investor.
How STT Affects Intraday and F&O Trading
For intraday equity traders, STT is levied exclusively on the sell side at 0.025%. Although this is lower than the delivery equity rate, the cumulative financial drag increases sharply as trade volume rises.
In addition, the impact is even sharper for futures & options (F&O) traders following recent budgetary hikes, which pushed futures STT to 0.05% and options STT to 0.15% on premium value. These increases place a heavy penalty on high turnover strategies, directly reducing the margin of option writers and day-traders of futures on each squared-off contract.
More importantly, because these statutory charges are based on absolute turnover rather than net profitability, they drain the top line, reducing net returns on successful trades and deepening losses on failed trades.
Could India’s Next Budget Bring Relief? What Traders Should Watch
The Finance Minister has confirmed that LTCG tax, STT and parity across asset classes will form part of the pre-Budget consultations, leaving the door open for further discussion. SBI Research has recommended abolishing LTCG tax on equities and extending the holding period to two or three years to encourage more stable capital flows, citing foreign portfolio investor outflows exceeding ₹3 lakh crore in 2026 so far. The consultations could also bring renewed calls for STT rationalisation in the derivatives segment.
Traders should monitor industry bodies submissions, indicators of possible STT cuts in F&O and any alterations to cash-market rates or the intersection of STT and capital-gains taxation. Clarifications on the tax treatment of different asset classes could also affect equity transaction costs. While an immediate STT cut has been ruled out, whether the next Union Budget brings relief will depend on the proposals considered during the consultation process.
Related: Could India’s Stock-Market Tax Cuts Unlock Liquidity Across Stocks, Forex and Crypto?
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