Why F&O trading will attract more tax from next month — explained
1 min read . Updated: 24 Mar 2023, 02:09 PM IST
PremiumFinance Bill 2023: STT on sale of options has been raised from existing ₹1,700 to ₹2,100 on sale of ₹1 crore turnover
F&O trading: The Future & Option (F&O) trading is going to cost more from 1st April 2023 as Finance Bill 2023 amendment has provision to raise Security Transaction Tax (STT) on sale of options and futures. The Finance Bill 2023 amendment tabled and passed by Lok Sabha on Wednesday informs that STT applicable on sale of options has been raised by 23.52 per cent to ₹2,100 from ₹1,700 on a turnover of ₹1 crore. Similarly, STT on sale of future contract has been raised by 25 per cent to ₹1,250 from existing ₹1,000 against ₹1 crore turnover. The new STT will become effective from 1st April 2023 i.e. from the beginning of new financial year or say FY24.
What Finance Bill 2023 amendment says
According to the Finance Bill amendment 2023, STT on the sale of options has been hiked to ₹2,100 on a turnover of ₹1 crore whereas it used to levy ₹1,700 earlier. The STT has been hiked on sale of future contracts to ₹1,250 on ₹1 crore of turnover that levies ₹1,000 in current tax regime. On the options side, the STT is charged on premium and not the strike price.
Double blow to F&O trading
Speaking on the rise in STT on F&O trading, Avinash Gorakshkar, Head of Research at Profitmart Securities said, "The move is a double blow for high frequency F&O traders. Recently, NSE announced to scrap 'do not exercise' facility that is going to impact F&O traders at a larger extent as auto settlement won't remain available for F&O traders from April expiry. Now, this rise in STT on F&O trading is going to further dent the morale of high frequency F&O traders and it will have negative impact on F&O trade volume."
Avinash Gorakshkar said that raising the STT in F&O segment should have come at the time of tabling of the Union Budget not in the Finance Bill 2023 amendment.
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