Budget 2026: STT hike to squeeze brokers' earnings

The proposed increase in the Securities Transaction Tax (STT) on equity futures to 0.05% from 0.02% and on option premiums to 0.15% from 0.1% is likely to dent volumes in the derivatives segment. Also, tax on options exercise will rise to 0.15% from 0.125%. This applies only to equities and equity derivatives, with no change in taxation for commodities. The revenue and margins of broking firms with higher exposure to equity derivatives may come under pressure since these derivatives contribute nearly 70–80% to their broking income.

“The STT hike is expected to dampen trading activity in the equity derivatives segment, with arbitrageurs, algo and high‑frequency traders, and hedgers—who are key liquidity providers—likely to feel the biggest impact,” said Roop Bhootra, Whole‑time Director, Anand Rathi Share and Stock Brokers.

Reacting to the announcement, shares of broking firms fell 5–13% on the BSE during afternoon trade. Groww and Angel One declined 13% and 11%, respectively, reflecting their higher exposure to the derivatives segment. Anand Rathi Share and Stock Brokers, Nuvama Wealth, and Motilal Oswal Financial Services slipped 8%, 6%, and 3%, respectively. Shares of Bombay Stock Exchange declined 8% as decline in trading volume will impact its revenue.


Higher STT pushes up overall trading costs for market participants. As volumes decline, broker margins come under pressure since their fixed operating expenses remain unchanged.