Higher securities transaction tax (STT) on futures and options (F&O) will take effect with the start of the new fiscal year on April 1, 2026, which will alter the derivatives market in India. The Finance Minister announced the action in Budget 2026 with the intention of lowering speculative trading.
The futures STT has been raised from 0.02% to 0.05%. STT on premium for options increases from 0.1% to 0.15%. This suggests a 50% rise in options and a 150% increase in futures.
For futures traders, the increase in STT essentially means that breakeven is almost doubled. This is how futures math operates:
Assume the lot size is 65, the contract value is Rs 14.85 lakh, and the Nifty is at 22,845. The total charges under the new STT rate of 0.05% would be Rs 837, including Rs 742 STT, whereas under the previous STT rate of 0.02%, STT would be Rs 297 and other charges would be Rs 95. 392 divided by 65 is effectively six points. Now, the result of dividing 837 by 65 is around 13. In order to reach breakeven, futures traders must essentially catch a 2x move under the new STT rate.
The benefit is that modest scalps will lose their advantage, weak and poor entries will be penalized, and overtrading will become more expensive.
The trader will require a 26-point breakeven mark starting on April 1 for Bank Nifty futures, compared to the previous 10.4 points. In the meantime, dealers of Sensex futures will require a breakeven mark of 37.5 points instead of the previous 15 points.
But unlike futures, the breakeven point for options does not increase significantly, although a change of two to three points will hardly matter under the new STT regime, whereas it was a respectable trade under the previous STT rate.
