The Finance Ministry on Friday issued a clarification that the securities transaction tax (STT) on selling options has been┬а
increased to 0.0625% from 0.05% and not from 0.017% to 0.021% as mentioned in the latest amendment to Finance Bill 2023 that was passed by the Lok Sabha earlier on Fridat.
The STT for futures has been raised to 0.0125% from 0.01%. The hikes would be effective from April 1, they added.
Under the new rules, option traders will have to pay Rs 6,250 for every Rs 1 crore worth of turnover as against Rs 5,000 that is being paid currently, which translates into a hike of around 25%. Also, traders will now have to pay STT of Rs 1,250 on Rs 1 crore of turnover while selling futures.
“It appears that the amendment is not intentional but an inadvertent mistake and the same will be revisited in the time to come,” clarified FinMin.
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“The increase in STT will specially impact high frequency traders (HFTs). Any change in the cost structure has a material impact due to the thin spread in which HFTs operate,” Rajesh Gandhi, partner, Deloitte Haskins and Sells LLP told Reuters.
Indian shares extended losses for the third consecutive week as investors turned cautious after the government hiked STT on futures and options contracts, while lingering concerns of contagion in the global banking sector weighed.
The Nifty 50 index closed 0.77% lower at 16,945.05. The S&P BSE Sensex fell 0.69% to 57,527.10. Both the benchmarks logged weekly losses of nearly 1%.
All 13 of the major sectoral indexes declined, with the heavyweight financials index losing 0.69%. Forty-one of the Nifty 50 constituents fell on Friday.
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