Tax on stock derivatives trading raised; Nifty slides nearly 3%, BSE tumbles

The government hiked the securities transaction tax on equity futures to 0.05% from 0.02%. Following the announcement, shares of BSE and stockbrokers, including Angel One, tumbled.

The National Stock Exchange (NSE) in Mumbai, India, on Monday, Oct. 13, 2025. India has become one of the busiest IPO markets worldwide over the past two years, drawing global investors eager to tap its fast-growing consumer economy. Photographer: Dhiraj Singh/Bloomberg

India raised taxes on some equity transactions in a bid to further stem speculative trading by retail investors.

The government hiked the securities transaction tax on equity futures to 0.05% from 0.02%, according to the budget presented in Parliament on Sunday. The tax on options premium and on the exercise of options has been increased to 0.15% from 0.1%.

The announcement sparked a sharp decline in stocks, with the main NSE Nifty 50 Index slumping nearly 3% in intraday trading. Shares of the BSE — India’s second-largest stock exchange — and stock brokers including Angle One tumbled.

NSE Derivatives Turnover Highest Since November 2024
The move marks India’s determination to curb speculative trading after an influx of retail traders made the country the world’s top destination for such products by contracts traded. The regulator introduced several curbs in late 2024, including limiting the number of weekly index options contracts per exchange to one.

“The steep increase in STT could cool derivative activity and lead to a reduction in volumes,” said Shripal Shah, managing director at Kotak Securities Ltd. “The intent appears to be volume moderation rather than revenue maximisation.”

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