STT Hike: Why One Bank Nifty Lot Now Costs ₹468 More?

During the Budget 2026 speech, the Finance Minister Nirmala Sitharaman announced the increase in Securities Transaction Tax (STT). This is set to significantly raise trading costs for derivatives investors, particularly those dealing in index futures.

The STT on futures transactions has been raised sharply to 0.05% from 0.02%, a move that caused turbulence in the Indian stock market and wiped off investor's wealth.

The announcement triggered a sharp sell-off on Dalal Street on Sunday, February 1, with BSE-listed companies collectively losing over ₹10 lakh crore in market capitalisation. The Nifty 50 ended the session nearly 500 points lower at 24,825, marking its steepest Budget-day decline since 2020.

How the Higher STT Impacts Traders?

To understand the real impact of the hike, consider an example using Bank Nifty futures.

Assume the Bank Nifty is trading at 52,000. One lot of Bank Nifty futures consists of 30 units, taking the total contract value to ₹15.6 lakh.

Under the earlier STT rate of 0.02%, a trader would have paid around ₹312 as Securities Transaction Tax on a single futures contract. However, with the revised STT rate of 0.05%, the tax outgo jumps to approximately ₹780 per lot, an increase of ₹468 on a single trade.

Why It Matters

The 150% increase in STT directly raises transaction costs for active traders and high-frequency participants, potentially reducing trading volumes and market liquidity. For investors who roll over positions frequently, the cumulative impact could be substantial.

The sharp market reaction underscores concerns that higher trading costs, combined with broader policy uncertainty, may weigh on sentiment in the near term, especially in derivatives-heavy segments of the market.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks. Read all the related documents carefully before investing.