New Delhi, Feb 1 The government explained on Sunday that the purpose of raising the Securities Transaction Tax (STT) on futures and options is to address systemic risks in the derivatives market and reduce excessive speculation.
Revenue Secretary Arvind Shrivastava told the media following the release of the Union Budget 2026–2027 that the decision to increase STT was made with the intention of reducing speculative activity in the F&O sector and bolstering market stability.
The announcement caused a sharp reaction in the markets, with benchmark indices falling more than 2% during intraday trading before partially recovering later in the session.
STT is a transaction-based tax levied on securities traded on recognised stock exchanges, covering equities, equity mutual funds, and derivatives such as futures and options. The tax is charged irrespective of whether the trade results in a profit or a loss.
Market experts said the sharper-than-expected hike triggered the intra-day sell-off.
