The Union Budget 2026 made a change for people who trade derivatives. It increased the Securities Transaction Tax on trades that involve Futures and Options. Even though the fees that brokers charge have not changed the actual cost of trading Nifty Futures and Options has increased a lot. This change really affects people who trade during the day people who quickly buy and sell options and people who make a lot of trades quickly, like high-frequency traders of Nifty Futures and Options.
Let us understand this impact clearly using Nifty at the 25,000 level, which makes the cost difference easier to visualize.
What Is STT and Why It Matters for Traders
STT (Securities Transaction Tax) is a mandatory tax which is imposed by the government on every trade executed on recognised stock exchanges. The STT cannot be reduced, even on zero-brokerage platforms, and it is charged on all eligible Futures and Options trades. STT is automatically deducted by the exchange after once a trade is executed.
In the Union Budget 2026, the government increased STT on Nifty Futures sell transactions and on Options premium. This has directly raised the cost of derivatives trading. Since STT applies to every trade, frequent traders now face higher break-even levels, making F&O trading structurally more expensive despite unchanged brokerage rates.
Impact on Nifty Futures
Let understand with a practical Nifty Futures example.
Assume:
- Nifty Index Level: 25,000
- Current Lot Size: 65
Contract Value
25,000 × 65 = ₹16,25,000
STT Before Budget 2026
- STT rate: 02%
- STT payable = 0.02% of ₹16,25,000
= ₹325
STT After Budget 2026
- STT rate: 05%
- STT payable = 0.05% of ₹16,25,000 = ₹812.50
Additional Cost per Nifty Futures Trade = ₹487.50 extra per trade
If a trader does 10 Nifty Futures trades, in one day they have to pay a ₹4,875 every day just for the Securities Transaction Tax. This does not include the money they pay for brokerage exchange charges, Goods and Services Tax and stamp duty. The cost of Nifty Futures trades can really add up when you do a lot of them.
For intraday futures traders aiming for 20–30 point moves, this increased tax meaningfully reduces net profitability.
| Particulars | Before Budget | After Budget |
| Nifty Index Level | 25,000 | 25,000 |
| Lot Size | 65 | 65 |
| Contract Value | ₹ 16,25,000 | ₹ 16,25,000 |
| STT Rate | 0.02% | 0.05% |
| STT Payable | ₹ 325 | ₹ 812.50 |
Impact on Nifty Options
Options trading is the most active segment among retail traders, and the STT hike impacts it directly.
Assume:
- Nifty Level: 25,000
- Option Traded: 25,000 CE
- Option Premium: ₹200
- Lot Size: 65
Total Premium Value
₹200 × 65 = ₹13,000
STT Before Budget 2026
- STT rate: 10%
- 10% of ₹13,000
= (0.10 ÷ 100) × 13,000 - STT payable = ₹13
STT After Budget 2026
- STT rate: 15%
- 15% of ₹13,000
= (0.15 ÷ 100) × 13,000 - STT payable = ₹19.50
While the difference of ₹5.50 per trade looks small, option traders typically place multiple trades per day. Over a month of frequent trading, this higher STT directly eats into profits especially for scalpers targeting small gains.
| Particulars | Before Budget | After Budget |
| Nifty Level | 25,000 | 25,000 |
| Option Contract | 25,000 CE | 25,000 CE |
| Option Premium (₹) | 200 | 200 |
| Lot Size | 65 | 65 |
| Total Premium Value | ₹ 13,000 | ₹ 13,000 |
| STT Rate | 0.10% | 0.15% |
| STT Payable | ₹ 13.00 | ₹ 19.50 |
Who Is Most Affected by the STT Hike?
The biggest impact is on:
- Intraday Nifty traders
- Option scalpers
- High-frequency traders
- Retail traders with smaller capital
Long-term investors and equity delivery traders remain largely unaffected, as STT on delivery-based cash market trades remains unchanged.
Conclusion
The Budget 2026 STT hike has clearly increased the real cost of trading Nifty Futures and Options. Even though brokerage rates remain unchanged, every trade now carries a higher tax burden, directly impacting profitability. In this new structure, only quality trades justify execution. After this move for Nifty traders adapting strategy is no longer optional it is essential.
