Zerodha co-founder Nithin Kamath has expressed worries about the continuous increase in Securities Transaction Tax (STT), stating that the escalating taxes are gradually impacting trading activities in the markets. Kamath highlighted that despite the reintroduction of long-term capital gains (LTCG) tax, STT has been consistently rising with each Union Budget announcement. He emphasized his disappointment as a market participant, hoping for a reduction in STT but witnessing its continuous escalation year after year.
The co-founder pointed out a significant surge in STT during Budget 2024, where the tax on futures and options (F&O) trades was raised by 60 percent. The tax on futures increased from 0.0125 percent to 0.02 percent, while the levy on options rose from 0.0625 percent to 0.1 percent. Kamath noted that despite the initial impact not being evident due to a strong bull market phase, the effects became apparent over time.
As market conditions cooled in the past year, the higher STT rates started affecting trading volumes. Kamath also referenced the government’s projected STT collections for the financial year 2025-26, estimated at Rs 78,000 crore. However, as of January 11, collections had only reached around Rs 45,000 crore, falling significantly short of the target. Even with an additional Rs 12,000 crore expected by March, the total collection is likely to be close to Rs 57,000 crore, nearly 25 percent below the anticipated amount.
