For millions of traders who test their luck in the stock market every day, Budget 2026 arrived with a heavy message. What was once seen as a fast route to profits through F&O trading has now become noticeably more expensive because of an unexpected hike in STT. The government has made it clear that excessive speculation will no longer be easy or cheap.
Finance Minister Nirmala Sitharaman, through the STT hike on F&O, has tightened the rules around the derivatives market. This move did not come out of nowhere. It is the result of growing concern over retail investors suffering repeated losses and rising instability in the market.
What Exactly Changed in the STT Hike on F&O
The government has increased the Securities Transaction Tax on both Futures and Options trades. STT on Futures has been raised from 0.02 per cent to 0.05 per cent. In the case of Options, the tax on both premiums and exercises has been increased to 0.15 per cent.
These numbers may look small on paper, but for traders who enter multiple positions every day, the higher cost directly eats into profits.
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Why the Government Took This Step
SEBI has been warning for a long time that retail participation in the F&O market is hurting more investors than helping them. According to the regulator, nine out of ten retail traders in derivatives end up losing money. Chasing quick gains, many traders jump in without proper understanding and slowly drain their capital.
Through the STT hike on F&O, the government’s intention is clear. Trading is not being stopped, but its speed is being controlled. The idea is to encourage thoughtful decisions and create a more balanced market environment.
Why the Market Reacted So Sharply
Within minutes of the Budget announcement, brokerage stocks witnessed a sharp sell-off. Shares of BSE, Angel One, and Nuvama fell significantly. Investors fear that if F&O volumes decline, brokerage revenues could take a direct hit.
However, some market experts believe this reaction is driven more by sentiment than fundamentals, and the real impact will become clearer in the coming quarters.
There Is Another Side to This Decision
Several seasoned investors believe derivatives trading has caused serious damage, especially to young and inexperienced traders. From this perspective, the tax hike was necessary to protect market health. Higher costs may reduce unnecessary trading and slowly push investor attention back toward the cash market and long-term investing.
In short, the decision may feel painful now, but it could prove beneficial over time.
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What This Means for the Common Trader
Entering F&O trades without a clear plan and relying purely on luck has now become far more expensive. Small traders, in particular, will need to rethink their strategies. Budget 2026 acts as a reminder that quick money rarely comes without risk.
Conclusion
The STT hike on F&O announced in Budget 2026 is undoubtedly a tough move. However, its underlying intention to protect investors and bring stability to the market is evident. The coming months will reveal how trading volumes adjust and how well the market adapts to this new reality.
Disclaimer:
This article is intended for general information and news analysis only. It should not be considered investment advice. Stock market investments are subject to risk. Readers are advised to consult a qualified financial advisor before making any investment decisions.
Dr. Bidyut Barun Sarmah, with 22+ years of experience in print, electronic, and digital media, holds an MA and PhD in Mass Communication and Journalism. He has worked with AIR, Doordarshan, and the Publication Division under the Ministry of Information and Broadcasting. A published author and researcher, Dr. Sarmah writes extensively in both Assamese and English. He was also awarded a prestigious fellowship by the Ministry of Culture, Government of India, for his study on journalistic literature—an achievement that highlights his depth of scholarship and contribution to media studies. At Nest of News, he leads the editorial team and contributes across diverse topics.