BSE, Angel One, Groww slide up to 17% as STT hike in Budget 2026 hits F&O stocks
- 1st February 2026
- 01:00 PM
- 2 min read
PL Capital
Summary
Capital market stocks fell sharply after the government announced a steep hike in Securities Transaction Tax (STT) on equity derivatives in the Union Budget 2026–27. The move raised concerns over higher trading costs and a potential slowdown in futures and options (F&O) volumes.Mumbai | 1:00 PM
Capital market stocks came under heavy selling pressure on Sunday after Finance Minister Nirmala Sitharaman announced a sharp increase in Securities Transaction Tax (STT) on equity derivatives in the Union Budget 2026–27.
The government raised STT on equity and commodity futures to 0.05% from 0.02%. The tax on equity options premium was also increased to 0.15% from 0.1%, sparking fears of higher costs for traders and lower market volumes.
Following the announcement, capital market stocks slid sharply in intraday trade. Shares of BSE dropped nearly 15%, while IIFL Capital Services fell over 17%. Recently listed Groww declined around 14%, and Angel One slipped about 13%. Other capital market stocks like CDSL also slipped in trade.
Market experts said the higher STT will increase impact costs for traders, hedgers, and arbitrageurs. According to market experts the move is likely to cool derivative activity.
Analysts believe the intent is to moderate speculative volumes rather than maximise tax revenue, as lower trading activity could offset potential gains from the higher STT.
What is STT?
Securities Transaction Tax (STT) is a direct tax levied by the Government of India on the purchase and sale of securities listed on recognised stock exchanges such as the Bombay Stock Exchange (BSE) and the National Stock Exchange of India (NSE).
Introduced in 2004, STT is designed to simplify tax collection, track market transactions and curb tax evasion.
In simple terms, whenever you buy or sell shares, equity derivatives, or equity-oriented mutual funds on the exchange, STT is automatically charged. It is charged on every transaction, irrespective of whether the trade results in a profit or a loss.
While long-term capital gains (LTCG) tax on listed equities was reintroduced in the Union Budget 2018, STT has continued to remain in force.
New STT rates announced in Budget 2026
| Instrument | Old STT Rate | New STT Rate (Budget 2026) |
| Futures | 0.02% | 0.05% |
| Options (Premium) | 0.10% | 0.15% |
| Options (Exercise) | 0.125% | 0.15% |
Note: STT is levied only on equity and equity-linked instruments and does not apply to commodities.
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