Budget 2024: In a significant blow to Futures and Options (F&O) traders, Finance Minister Nirmala Sitharaman declared raising the STT rate from 0.01 percent to 0.02 percent. So, after implementing this budget proposal, equity and index traders will have to pay double the tax for their trade.
The finance minister announced the budget proposal to double the STT rate, saying, "I have a couple of proposals for deepening the tax base. First, Security Transactions Tax (STT) on futures and options of securities is proposed to be increased to 0.02 percent and 0.1 percent, respectively. Second, for reasons of equity, I propose to tax income received on buyback of shares in the hands of the recipient."
Speaking on the Budget proposal regarding the STT rate hike, Saurabh Jain, Vice President of Research at SMC Global Securities, said, “The decision to raise the rate for equity and index traders is going to have a negative impact on the Indian stock market in the near term. It will discourage F&O trade if this budget proposal gets implemented.”
On whether the move is aimed at discouraging the retail investors from moving from cash to F&O segment, Saurabh Jain said, “We can say that as the government has announced to raise the limit of exemption of capital gains from ₹1 lakh to ₹1.25 lakh per year.”
The Indian stock market benchmarks, the Sensex and the Nifty 50, plunged almost 2 percent each as Union Finance Minister Nirmala Sitharaman, in her Budget 2024 speech, proposed increasing taxes on market gains. This dealt a blow to expectations that the government may leave them unchanged.
Sensex fell almost 1.6 per cent, and the Nifty 50 plunged 1.8 per cent in the intraday session after Sitharaman proposed an increase in market gain taxes.
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