Shankar Sharma backs Budget 2026 STT hike on derivatives, calls F&O a poison
Shankar Sharma backs Budget 2026 STT hike on derivatives, calls F&O a poison
Budget 2026 hikes STT on derivatives, drawing mixed reactions: Sharma praises the move, calling F&O a 'poison', while analysts warn on hedging and volatility.
Budget 2026 introduced a higher Securities Transaction Tax (STT) on derivatives, triggering a sharp reaction in the market during a special live weekend trading session. Shares of key platforms like BSE, Groww, and Angel One fell as much as 13.5% intraday, underscoring the immediate heartbeat of investor sentiment.
Ace investor Shankar Sharma, founder of GQuant FinXray, voiced strong support for the move, saying he loved the Budget for one major reason: hiking STT on derivatives. He compared derivatives trading to a \'poison\' laced with \'cocaine\' and warned that the destructive impact would be felt across generations, describing it as a pure wealth transfer from traders to F&O brokers.
Finance Minister Nirmala Sitharaman outlined the proposal to raise STT on futures to 0.05% from 0.02% and to lift STT on options (premium and exercise) to 0.15% from 0.10% and 0.125%, respectively. The government stressed that these changes apply strictly to futures and options, with other market segments remaining unchanged.
Experts say the hike could curb speculative trading and push investors toward longer-term, fundamentals-driven positions. However, they caution that higher taxes on trading costs may unsettle markets in the near term and complicate hedging for participants. The market has been watching how foreign portfolio investors and domestic traders will adjust to the higher costs amid broader economic conditions.
In sum, Budget 2026 presents a targeted approach to F&O taxation, signaling a potential shift in trading dynamics while aiming to encourage longer-term investing. Market watchers and participants will be evaluating the real-world impact as banks, brokers, and exchanges adapt to the new framework.
