The Union Budget 2024-25 has introduced significant changes to the Securities Transaction Tax (STT) structure:
- Rate Increases:
- Options: The STT on the sale of options has been increased from 0.062% to 0.1% of the option premium.
- Futures: The STT on the sale of futures contracts has been raised from 0.0125% to 0.02% (MoneyControl) (Outlook Business & Money).
- Impact on Market Participation:
- These increases are part of a broader strategy to curb speculative trading and encourage long-term investments. The government aims to reduce the frequency of high-frequency trading, which often leads to market volatility (MoneyControl).
- Classification and Monitoring:
- There is also a proposal to reclassify income from Futures and Options (F&O) transactions from ‘business income’ to ‘speculative income’. This reclassification could lead to higher tax rates on F&O income, aligning it with the tax treatment of lotteries and cryptocurrencies (Outlook Business & Money).
- Additionally, the implementation of Tax Deducted at Source (TDS) on F&O transactions is being considered to better monitor and control trading activities (Outlook Business & Money).
These modifications aim to enhance tax compliance and reduce excessive speculative trading, promoting a more stable and long-term investment environment in the Indian stock market.
