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F&O Trading Announced in Budget 2024: According to brokerage estimates, about 90 percent of traders lose investments in F&O. At the same time, the government is considering increasing its trading fees to protect retail traders from losses. Security transaction tax (STT) may be increased on F&O transactions. The government is targeting high-frequency trading and algorithm-based hedge funds, Nirmala Sitharaman held a pre-budget meeting with the financial sector and capital markets yesterday to discuss the matter.
Charges applicable on various trading in stock market
STT is applicable on trading of futures and options contracts. Currently, STT on options has been increased from 0.05 per cent to 0.0625 per cent from April 1. STT of 0.1 per cent is applicable on both buying and selling of equity delivery. Equity intraday sales are taxed at 0.025 per cent, equity futures at 0.0125 per cent during sales, equity options at 0.0625 per cent on sales and 0.125 per cent on exercise.
STT was implemented 20 years ago
Market regulator SEBI has admitted that 9 out of every 10 traders incur losses in F&O trading and it is constantly monitoring it. STT was implemented 20 years ago in 2004. It applies to buying and selling in the stock market. According to the central government's estimate, in the financial year 2024, it can earn Rs. 27625 crore. Which is 10.5 percent more than last year's revised budget estimate. Its share is 1.5 percent against the estimated direct tax collection of Rs 18.24 lakh crore.
What changes can be made in the budget?
The upcoming Union Budget is likely to change the tax treatment of income from the futures and options (F&O) segment with the aim of discouraging retail investors from derivatives trading. It is being said that the government is considering shifting F&O trading income from 'professional income' to 'speculative income' along with various options in the budget. The participation of retail investors has increased in this segment. In such a situation, if there is a major correction in the market, then these decisions can be taken due to the fear of big losses.
