Learn › Charges and costs

STT on F&O after Budget 2026: what changed and what it costs you

Updated 5 November 2026 · 9 min read

In the Union Budget on 1 February 2026, the government raised the Securities Transaction Tax (STT) on futures and options. The new rates have applied since 1 April 2026. For futures traders, it’s the biggest change in years: the tax on every sell more than doubled. Here’s exactly what changed, with real numbers.

Old vs new STT rates

That’s a 150% increase for futures, 50% for selling options and 20% for exercised options. The Income Tax Department also clarified that only futures and options were affected and other STT rates stayed the same.

Part of a longer trend

This wasn’t the first increase. Since Budget 2023, STT on futures has quadrupled, from 0.0125% to 0.05%, and STT on selling options has more than doubled, from 0.0625% to 0.15%. The stated aim has been to cool excessive speculation in F&O, where many retail traders lose money. Market experts have debated whether higher taxes actually achieve that, but for traders the practical result is simple: every trade now costs more.

Example 1: one Nifty futures trade, old vs new

You buy one lot of Nifty futures at 25,000 and sell it at 25,100. We’ll use a lot of 65 units for this example (lot sizes change from time to time, so check the current size on NSE). That’s a buy value of ₹16,25,000, a sell value of ₹16,31,500, and a price profit of ₹6,500. All other charges are at today’s discount-broker rates.

STT is now the single biggest cost in a futures trade, and total charges per round trip roughly doubled. The most important line is the last one: Nifty now has to move about 15 points in your favour just to cover costs, compared to about 7 before. Strategies that aimed for small, quick moves are hit the hardest.

Example 2: one Nifty option bought and sold

You buy 65 units of a Nifty option at a premium of ₹100 (₹6,500) and sell at ₹110 (₹7,150), making ₹650 on price.

For option buyers trading small premiums, the change is small, about ₹3.58 more here, because STT is charged only on the premium and brokerage is the bigger cost. Option sellers who trade large quantities of premium feel it more, since their STT bill grows in proportion to the premium they sell.

What about options that expire in the money?

If you hold an in-the-money option until expiry and it’s exercised, STT of 0.15% is charged to the buyer on the option’s intrinsic value. Before the Budget, this exercise rate (0.125%) was higher than the rate for selling an option (0.10%). Now both are 0.15%, so the gap between closing before expiry and letting it be exercised has narrowed. Brokerage and settlement rules still differ, especially for stock options, so check your broker’s expiry policy.

What it adds up to in a month

A single trade’s extra STT can look small, but it repeats. In Example 1, the extra STT is about ₹489 per futures round trip. A trader doing just two such trades a day for 20 trading days pays roughly ₹19,600 more in STT every month than before, whether those trades win or lose.

That’s why the government’s STT collections jumped after the change: Business Standard reported collections up 53% year on year in the first months of FY27.

What this means for how you trade

• Recalculate your breakeven. If you trade futures, your old “minimum target” may no longer cover costs. Use the calculator before you trade, not after.
• Count trades, not just wins. Every round trip now carries a heavier fixed tax. Fewer, higher-quality trades protect your profit more than ever.
• Update any backtests. A strategy that was profitable on paper at 0.02% STT may not be at 0.05%.
• Track net profit. Your broker’s P&L screen often shows gross profit. A journal that subtracts all charges shows what you really made.

Higher costs reward patience. Waiting for a clear setup instead of taking marginal trades has always been good discipline; now it’s also cheaper. If you want to practise, try Patience Pays, our free game that rewards waiting for the right setup.

Frequently asked questions

Sources

Rates and dates as announced in the Union Budget 2026-27 and reported by Business Today, 5paisa and Upstox; the Income Tax Department’s clarification as reported by Moneylife; STT collections as reported by Business Standard. Worked examples use Tradyog’s calculator with discount-broker NSE rates as of November 2026. Always check your own contract note.

This article is for education only and isn’t investment advice. Tradyog is not registered with SEBI as an investment adviser or research analyst.

Related guides

• Intraday trading charges, explained simply
• Pivot points and CPR, explained simply