Budget 2025: Broking industry expects tech grants, STT rationalisation, simplified taxation

Other expectations include working on improving the technology adoption.

The broking industry is anticipating key reforms in the upcoming budget to address its evolving needs. Expectations include grants for technology adoption to ensure a seamless transition to the T+0 settlement cycle and rationalization of the Securities Transaction Tax (STT) to ease trading costs, say industry people.

The industry expects rationalization or removal of the Securities Transaction Tax (STT). "STT is currently an additional burden on traders and investors, eating into their profitability, and discouraging active participation in the retail markets, which can enhance market liquidity and efficiency," said Gurpreet Sidana, chief executive officer at Religare Broking.

A moderation in STT will support domestic retail participation and make Indian equities more attractive to foreign investors, said Shripal Shah, managing director and CEO of Kotak Securities. "It could help counteract FII outflows and stabilise the rupee," Shah added.

In the last budget, STT on futures & options was doubled. The rates on STT on sale of an option in securities was increased from 0.0625 percent to 0.1 percent of the option premium. Meanwhile, STT on sale of a futures contract was increased from 0.0125 percent to 0.02 per cent of the price at which such futures are traded.

Other expectations include working on improving the technology adoption. Trivesh D, chief operating officer at Tradejini said that the government could focus on offering technology adoption grants or tax incentives to help brokers smoothly adopt to the T+0 settlement.

Sidana said that the government could enhance the Long-Term Capital Gains (LTCG) tax exemption limit, which will incentivise long-term investments. Trivesh said that simplifying the capital gains tax structure by aligning rates and holding periods across asset classes could also reduce complexities for investors.

Industry players also say that if the government reduces tax rates for smaller taxpayers, it could lead to higher disposable income in the hands of the common man. "An increase in purchasing power will boost consumption and indirectly benefiting the stock market by spurring growth in consumer-driven sectors," said Shah.

If the said expectations are approved, stocks like Angel One, ICICI Securities, Motilal Oswal Financial Services, 360 One, IIFL Securities, Geojit Financial Services will be in focus.

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