Union Budget 2026 revises securities transaction tax

Finance Minister Nirmala Sitharaman announced significant increases to securities transaction tax (STT) rates in the Union Budget 2026 on Sunday—a move that comes as the brokerage industry grapples with a sharp decline in retail participation.

The government will raise STT on futures to 0.05% from 0.02%, while STT on options premiums will increase to 0.15% from 0.1%. The levy on exercise of options will rise to 0.15% from 0.125%.

The move comes against the backdrop of slowing retail participation in markets after a period of intense activity. Data from the National Stock Exchange (NSE) show that active client accounts across brokerages declined sharply in 2025, reversing the strong growth seen a year earlier as tighter regulations and weaker market conditions weighed on trading volumes.

Brokerage executives had cautioned ahead of the Union Budget that repeated increases in transaction taxes risk dampening further activities.

In January, Nithin Kamath, Founder of discount broker Zerodha, had said that while a hike in futures and options STT in 2024 did not immediately hit volumes during a bull run, its impact became visible as markets cooled.

Industry leader Groww saw its shares plunge moments after the announcement by the Finance Minister. The stockbroking platform's shares were down over 11% by the time the Budget speech concluded.

The newly-listed company has been diversifying away from once-lucrative options trading services as tougher regulations hit the brokerage's user base.

Kamath added that STT collections for the current fiscal year are running well below government projections, arguing that higher rates may ultimately reduce overall revenue.

Industry-wide figures underscore that shift. The top 10 brokerages, which account for nearly 80% of the market, saw their combined active user base fall more than 10% in 2025, with even the largest platforms losing clients.

Regulators have simultaneously tightened rules around derivatives trading, including higher margin requirements and restrictions on weekly expiries, making speculative activity costlier and more difficult.