STT hike further stacks the odds against retail traders

Subscribe to enjoy similar stories. Financial awareness, not taxation, drives responsible investing, says Bhubaneswar-based finance researcher and former futures and options (F&O) trader Narayan Das, who has spent over a decade trading in derivatives, gaining firsthand experience of leverage, volatility, and how transaction costs steadily erode retail profits. “Many investors enter high-risk trades without understanding them.

Educating people about market risks and diversification is far more effective than trying to curb participation through higher STT or other levies," said the 56-year-old, who is also pursuing a PhD in financial literacy and its impact on mutual fund investment decisions. But the Union Budget 2026-27 has taken a different tack, raising the cost of F&O trading and making frequent short-term trades for investors like him more expensive. Higher taxes and fees push up breakeven levels, with implications for retail investors’ savings, investment behaviour, and long-term financial planning.

Short-term F&O trading is already a difficult business for retail individuals. A higher securities transaction tax (STT) just makes it tougher. When transaction costs rise, the first thing to change is the breakeven.

You need the market to move more in your favour just to not lose money. “Take a simple Nifty 50 example. If the Nifty 50 is at 25,000 and your total transaction cost is 0.1%, that’s 25 points gone immediately.

Before you make anything, the Nifty has to move more than 25 points in your favour just to break even. If it moves 15 or 20 points, you are in the right direction, but you still lose money after costs," said Mohit Mehra, vice-president, primary markets and payments, stockbroker Zerodha. "Futures STT