In big move, Sitharaman raises tax on Futures and Options trading; stock market crashes. Check full details

The announcement means that the Securities Transaction Tax (STT) charged on futures trading has been increased to 0.05 per cent of the transaction value.

Finance minister Nirmala Sitharaman on Sunday announced a hike in STT (Securities Transaction Tax) on Futures and Options, a move likely to impact derivatives trading costs. Sensex and Nifty crashed after the announcement and the conclusion of Sitharaman's Budget speech.

Finance minister Nirmala Sitharaman shows the digital tablet, enclosed in a traditional red 'bahi-khata' style pouch, at Parliament (PTI)

The government will also tax buyback proceeds for all types of shareholders as capital gains, FM Sitharaman announced.

Finance minister Nirmala Sitharaman on Sunday presented the Union Budget 2026-27 in Parliament, unveiling the government's fiscal strategy for the coming year. Track Budget speech live updates here

Benchmark indexes Sensex and Nifty lost the gains after a hike in the securities transaction tax on derivatives announced in the Union Budget. The Nifty 50 was down 1.94 per cent at 24,832.1, while the BSE Sensex lost 1.8 per cent to 80,834.11 as of 12:35 pm.

STT raised on Future, Option Trading. What does it mean

-STT on Futures raised to 0.05 per cent from 0.02 per cent

The finance minister's announcement means that the Securities Transaction Tax (STT) charged on futures trading has been increased to 0.05 per cent from 0.02 per cent of the transaction value, making futures trades slightly more expensive.

STT is a government tax applied to market transactions, so this hike directly raises the cost for traders, especially those who trade frequently or in large volumes.

While the increase may help curb excessive short-term speculation and boost tax revenue, it also reduces net profits for active futures traders.

The Budget 2026 focuses on three ‘kartavyas’ or duties, Nirmala Sitharaman began her speech by saying. The three kartavyas she said are: Accelerate and sustain economic growth along with building resilience to volatile global dynamics; fulfill spirations of our people and build their capacity; and ensure that every family, community, region and sector has access to resources, amenities and opportunities.

An STT Options hike means the government has increased the Securities Transaction Tax charged on Options trades, which raises the cost of buying or selling options in the stock market.

This directly impacts Options traders-especially frequent and short-term traders-by reducing their net profits per trade.