STT Hike On F&O To Take Effect From April 1 Amid Rising Options Activity
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- 2 min read
Last Updated: 25th March 2026 - 12:12 pm
Summary:
The government’s plan to hike the Securities Transaction Tax (STT) on futures and options will come into effect from April 1, 2026, as trading continues at higher levels, as seen from official and market-derived numbers.
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The government’s plan to hike the Securities Transaction Tax (STT) on futures and options (F&O), as announced in the Union Budget 2026-27, will come into effect from April 1, 2026.
Invest in Indian Markets and Unlock Future Potential With 5paisa!Revised STT Rates
Under the revised structure, STT on futures contracts will rise to 0.05% from 0.02%. Regarding options, the tax on premiums will rise to 0.15%, up from the previous 0.1%. Furthermore, the Securities Transaction Tax (STT) on the exercise of options will also see an increase, climbing to 0.15% from 0.125%, in line with the Budget's stipulations.
Derivatives Activity Remains Elevated
Trading activity in index options has remained strong despite earlier regulatory measures. According to data compiled by BS Research Bureau, Nifty 50 index options premium turnover rose from ₹9,13,277 crore in November 2025 to ₹12,83,969 crore in February 2026. As of March 23, 2026, turnover stood at ₹11,42,635 crore.
In terms of volumes, the total number of index options contracts increased from 2.59 billion in November 2025 to 3.56 billion in January 2026, before moderating slightly to 3.55 billion in February. Contracts totaled 2.34 billion as of March 23rd.
Volatility Trends
Market volatility has also risen sharply in 2026, with the India VIX increasing more than 150% so far this year and rising around 75% in the past month to hover near the 25 mark, according to market data.
STT Collections Increase
Government receipts from STT have been increasing over the years. Provisional figures released by the Income Tax Department indicate that the government has collected ₹55,717 crore as STT till March 17 in FY2026 compared to the collection of ₹53,095 crore in FY2025. The revised tax structure will be applicable for derivatives trade from April 1.
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