Amid concerns of rising investor trading in the F&O segment, the new securities transaction tax (STT) levied on sale of futures and options contracts will kick in from October 1. Experts say that this could rein in excessive speculative F&O trading.
STT on sale of options will increase from 0.0625 per cent to 0.1 per cent, while that on futures will rise from 0.0125 per cent to 0.02 per cent from October 1. The higher taxes on F&O along with a set of proposals being mooted by the market regulator may reduce speculative trades in the market, particularly from retail investors, said experts.
Rising concerns
This comes amid rising concerns of losses by retail investors in the F&O segment. Aggregate losses of individual traders exceeded ₹1.8-lakh crore between FY22 and FY24. 93 per cent of over 1 crore individual F&O traders incurred average losses of around ₹2 lakh per trader, inclusive of transaction costs. Top 3.5 per cent of loss-makers, about 4 lakh traders, lost ₹28 lakh per person, on average.
Only 7.2 per cent of individual F&O traders made a profit over these three years and just 1 per cent earned profits of over ₹1 lakh, after adjusting for transaction costs. “If the idea was to cool down the activity in the markets, the new STT rate might just do the trick,” said an industry expert.
