How STT hike on F&O trading could eat into your profits from April 1

Securities transaction tax to impact trading margins.

• STT on futures up to 0.05%, options premium to 0.15% from April 1.
• Higher STT will raise trading costs for futures and options traders.
• Markets rebound on Monday; Sensex, Nifty gain 1%.

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Finance Minister Nirmala Sitharaman, in her Budget speech for 2026-27, announced an increase in the Securities Transaction Tax (STT) on futures and options (F&O) trades, a move that will raise transaction costs for market participants from April 1.

The STT on futures contracts has been increased to 0.05 percent from the existing 0.02 percent, marking a 150 percent hike. In the case of options, STT on the premium has been raised to 0.15 percent from 0.10 percent, a 50 percent increase, while STT on exercised options has been increased to 0.15 percent from 0.125 percent, a hike of 20 percent.

The higher levy will directly impact trading costs. For instance, in a Nifty futures trade with a contract value of Rs 50,00,000, STT at the revised rate of 0.05 percent works out to Rs 2,500, compared with Rs 1,000 earlier when the rate was 0.02 percent. On a contract value of Rs 10,00,000, the STT rises to Rs 500 from Rs 200 previously.

If a trader executes 20 such futures trades in a month, the additional STT alone would amount to Rs 30,000 on a Rs 50,00,000 contract value, even before accounting for brokerage, exchange charges and GST. However, the actual costs will vary depending on market levels and contract values.

In the options segment, consider a Nifty options trade where the option premium is Rs 100 and the lot size is 50. The total premium value comes to Rs 5,000. At the revised STT rate of 0.15 percent, the tax payable is Rs 7.50, compared with Rs 5 earlier.

For an active options trader executing around 300 such trades in a month, the additional STT adds up to Rs 750. For volume-driven or scalping strategies that rely on tight spreads, this increase can quietly eat into overall returns.

Going ahead, the sharp increase of STT in futures and options is likely to act as a marginal negative for FPI flows in the near term, particularly for high-frequency and derivative-focused global funds, said Aakash Shah, Technical Research Analyst at Choice Equity Broking.

Meanwhile, the stock markets rebounded on Monday on value buying after facing a massive drubbing on the Budget day. The Sensex rallied 943.52 points or 1.17 percent, to settle at 81,666.46. The Nifty climbed 262.95 points or 1.06 percent to end at 25,088.40.

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