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Speaking at the Bloomberg New Economy Forum in New Delhi, Finance Minister Nirmala Sitharaman said she was keen to hear stakeholders’ views on Long Term Capital Gains Tax (LTCG) and Securities Transaction Tax (STT).
Before we dive in, here’s what these taxes mean.
LTCG is a tax on the profit you earn when you sell an investment after holding it for a certain period. How long you need to hold it depends on the investment. The tax applies to your taxable profit, not the full amount you receive.
STT is a tax on certain trades involving shares, equity mutual funds and futures and options. You pay it whether you make a profit or a loss. The rate depends on the type of trade.
How markets reacted: Indian stocks recovered sharply after her comments, with both the Nifty 50 and Sensex rising more than 1%.
Shares of stock exchange BSE and depositories CDSL and NSDL, which help investors hold shares electronically, also gained.
For context, the Finance Minister had proposed higher STT on futures and options in the Union Budget 2026.
The rate on futures rose from 0.02% to 0.05%. For options, the rates on the premium, or the price paid to buy an options contract, and on exercising the contract now stand at 0.15% each.
The government’s aim was to discourage excessive speculation and boost tax revenue.
But higher STT also makes trading more expensive. These costs add up with every transaction, putting more pressure on frequent traders’ returns, even when their trades are profitable.
This could encourage traders to make fewer trades and be more selective about the bets they take.
The numbers: the government collected ₹40,214.36 crore through STT in FY2026-27 up to September 17, nearly 53% more than the ₹26,305.72 crore collected during the same period last year. The rise followed the higher rates introduced in April.
