The government's decision to raise Securities Transaction Tax (STT) on futures and options (F&O) trading is not driven by revenue considerations, but is intended to protect small investors from heavy losses in speculative trades, Finance Minister Nirmala Sitharaman said on Tuesday.
Quoting a study, she told PTI Videos in an interview that more than 90 per cent of people entering the F&O market had lost huge money and the Government has kept larger public interest in mind while deciding to hike STT on such derivative trade.
"Like, as they say in Hindi, satta was happening," Sitharaman said, referring to speculative bets being placed on shares in the F&O segment of equity markets.
The FY27 Budget has proposed an increase in STT on futures contracts to 0.05 per cent from 0.02 per cent. STT on options premium and exercise of options are proposed to be raised to 0.15 per cent from the present rate of 0.1 per cent and 0.125 per cent, respectively.
Sitharaman said the finance ministry has been receiving calls from scores of people seeking government intervention to deter small investors from losing money in the F&O segment. "It (STT hike in F&O) is not for revenue consideration," she said.
Asked if the government could have proposed a threshold for investors to participate in derivatives instead of raising STTs, Sitharaman said the hike would act as a restriction and deterrence.
"When the government does something, it does so keeping the larger number of public (in mind), not those exceptions," the minister said.
The number of unique individual investors trading in the equity derivatives (F&O) segment was 1.06 crore in FY25, which dropped to about 75.43 lakh in FY26 (up to December 30, 2025).
As per a Sebi study titled 'Comparative study of growth in equity derivatives segment vis-a-vis cash market', individual investors incurred net losses to the tune of Rs 1,05,603 crore in FY25.
According to the Sebi study, over 90 per cent of retail investors' trades in the F&O segment lead to losses, and the capital markets regulator has also taken steps to reduce volumes in the past.
Sebi has also introduced a series of measures, for ensuring stability in the derivatives market, like rationalisation of weekly derivatives, increase in contract size, higher margin requirements, upfront collection of option premium, removal of calendar spread treatment on expiry day, and intra-day monitoring of position limits, etc.
Sitharaman also said the decision of the Trump administration to slash tariffs on Indian goods to 18 per cent is a "good auguring" for the country and will result in a boost to exports.
US President Donald Trump's steep 50 per cent tariffs had last year dented Indian exports by raising landed costs, squeezing exporter margins, and eroding competitiveness in the American market.
Sectors such as steel, aluminium, textiles, engineering goods, and some agricultural products were hit as higher duties led US buyers to shift orders to alternative suppliers.
On Monday, Trump announced the decision to slash US tariffs on Indian goods to 18 per cent from 50 per cent in exchange for India lowering trade barriers as well as stopping its purchases of Russian oil and instead buying oil from the US and potentially Venezuela.
On implementation, the deal would bring tariffs on Indian exports in line with most other Asian countries, which are around 15-19 per cent.
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