Budget 2026 STT Hike Targets Speculative F&O Trading, Says Revenue Secretary

The government has proposed a significant hike in STT on futures and options trades. For futures contracts, STT has been increased from 0.02 per cent to 0.05 per cent. For options, STT on the premium has been raised from 0.1 per cent to 0.15 per cent, while STT on the exercise of options has also been increased to 0.15 per cent.

Earlier in the day, the Income Tax Department issued a clarification on the hike in STT on futures and options trades and said, "Except futures and options (F&O), STT rates remain same for others."

It said the total volume of transaction in options and futures is more than 500 times of Indian Gross Domestic Product (GDP) and there was a justification to curb speculation.

"In Rupee terms, our GDP is 300 lakh crore rupees, while the volume for options and futures is more than 1.5 lakh lakh crore rupees. Therefore, there is justification for increase in rates to curb purely speculative activity in options and futures," the Income Tax Department said in a post on social media platform X.

Talking about the new Income Tax Act, 2025 which is slated to come into effect from 1st April 2026, the Revenue Secretary said, "After April 1, new rules and forms will be notified. For the taxpayer, Income Tax form is very crucial. The department aims at rolling out simple and technology savvy forms. We want those forms to be in public soon so that they can get familiar with it before April 1."

On the rationalisation of Tax Collected at Source (TCS) and Tax Deducted at Source (TDS), the Revenue Secretary said their primary objective is to act as a tax marker and encourage return filing.

"When a person's TCS or TDS is deducted, they get credit in their tax return. Wherever TCS and TDS were found unnecessary, they have been rationalised," he said.

On buyback taxation, the Revenue Secretary said the government has maintained the status quo on additional buyback tax for promoters, while simplifying the overall buyback framework.

"Buybacks are often used by companies for restructuring, and the system has now been simplified to reduce compliance burden," he said.

Addressing disclosure of foreign assets, he said the government is working to encourage voluntary compliance.

"Taxpayers with small foreign income can declare it by paying applicable tax and interest, without facing harsh penalties or prosecution. Earlier, severe penalties acted as a deterrent. We are moving towards a more facilitative regime," he said, citing last year's exemption from prosecution for certain bank balance disclosures.

On customs duty cuts, the Secretary said the objective is to promote domestic manufacturing. "The Budget focused on reducing duties on key commodities, which will help manufacturing and boost exports," he said.

Clarifying the tax holiday announced in the Budget for data centres, the Revenue Secretary said the benefit is aimed at companies using data centres rather than data centre operators themselves.

"Global cloud service providers require large data centres. If such data centres are set up in India, tax incentives are being provided to attract investment," he said.

- ANI