“STT Hike Meant to Deter Speculation”: Sitharaman
Finance Minister defends Budget 2026 tax changes, says move targets malpractice without hurting genuine investors
- FM says STT increase aimed at curbing speculative trading
- Futures STT raised to 0.05%, options levy also increased
- Credits retail investors for market resilience amid FII outflows
- Warns global fund flows increasingly driven by geopolitical factors
GG News Bureau
New Delhi, 8th Feb: Finance Minister Nirmala Sitharaman defended the increase in Securities Transaction Tax (STT) announced in Budget 2026, saying the move was intended to curb excessive speculation rather than hurt genuine investors.
Speaking at the NDTV Profit Conclave 2026, she said the higher levy was “for deterrent purposes” and described it as “a pill to solve speculative tendencies,” adding that it would “discourage malpractice rather than disrupt genuine market activity.”
Under the revised structure, STT on futures has been increased to 0.05 percent from 0.02 percent. For options, the levy has been raised to 0.15 percent on premium and on exercise, up from the earlier 0.10 percent and 0.125 percent. The changes triggered volatility in equity markets and raised concerns among brokers dependent on derivatives trading volumes.
The Finance Minister, however, dismissed pessimistic outlooks, highlighting the role of domestic investors in stabilising the markets. “The market survived due to the retail space amid FII outflows,” she said, crediting local participation for cushioning the impact of uncertain foreign capital flows.
She also cautioned that global fund movements were increasingly influenced by geopolitical developments. “Fund flows are being used as a geopolitical tool now,” she said, urging policymakers to remain vigilant as political shifts begin to influence capital allocation worldwide.
On the broader financial outlook, Sitharaman said India must balance ambition with prudence. She noted that the country “cannot be over ambitious in the banking and finance space” and added that the government was closely monitoring capital expenditure trends to maintain fiscal discipline alongside growth.
The revised STT structure will apply at the point of transaction on recognised exchanges, meaning high-frequency and speculative strategies will feel the impact first, as the government attempts to cool excesses in derivatives trading.
