India enacts Income-tax Act, 2025 and raises STT on F&O trades
Change
India replaced the Income-tax Act, 1961 with the Income-tax Act, 2025, effective April 1, 2026.
Why it matters
Equity derivatives traders now face higher per-trade taxation—futures STT rises to 0.05% and options premium/exercise STT to 0.15%—making speculative positions more costly and reducing leverage. Taxpayers and compliance teams must adopt a single "tax year" timeline and adjust filing and payment schedules, including advance tax obligations under the new law.
Implications
- • Retail equity derivatives traders must recalculate position sizing, trade frequency, and hedging to reflect the higher STT rates on futures (0.05%) and options (0.15%).
- • Broker-dealer trade-processing and settlement teams must update systems and tax-collection workflows immediately to apply the revised STT rates on F&O transactions.
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