The Union Budget presented on 1 February 2026 had two messages for market participants: a sharp rise in the securities transaction tax (STT) on derivatives, and no change to equity capital gains rates. Here is what changed, what stayed the same, and why the difference matters depending on how you trade.
What Changed: STT on Futures and Options
The Budget increased STT on equity derivatives, effective 1 April 2026:
Futures: from 0.02% to 0.05% of the traded value.
Options (premium): from 0.10% to 0.15%.
Options (exercise): from 0.125% to 0.15%.
The government said the aim was to discourage excessive speculation in derivatives. Reports at the time noted that capital-market stocks fell sharply on the announcement, because higher transaction costs can reduce trading volumes. For active derivative traders, STT is a cost paid whether the trade wins or loses, so it raises the profit a strategy needs just to break even.
What Did Not Change: Equity Capital Gains Tax
Budget 2026 left the rates introduced in July 2024 unchanged for FY 2026-27:
Short-term capital gains (STCG): 20% on listed equity shares and equity mutual funds held for less than 12 months.
Long-term capital gains (LTCG): 12.5% on gains above ₹1.25 lakh in a financial year, for holdings of more than 12 months.
In practice, a swing trader who buys and sells within a few weeks pays the 20% STCG rate on profits, while an investor holding for over a year pays 12.5% on gains beyond the annual exemption. This is one reason holding period is a real planning variable, not just a chart decision.
Buyback Taxation: A Quieter Change
The Budget also moved share buyback proceeds, for all categories of shareholders, into the capital gains framework, with an additional levy for promoters aimed at curbing tax arbitrage. If you hold shares in a company that announces a buyback, the tax treatment of what you receive is now tied to your capital gains position, so check your cost of acquisition and holding period.
Using Losses Sensibly
Under current rules, short-term capital losses can be set off against both short-term and long-term gains, while long-term losses can be set off only against long-term gains. Unabsorbed capital losses can generally be carried forward for up to eight years if you file your return on time. Booking a loss to offset gains is a legitimate tax step, but it should follow a sound exit decision, not drive it.
What This Means for Delivery Traders
If you buy shares in delivery, which is the approach taught at PTI, the headline change in this Budget was the derivatives STT, not your capital gains rate. Your main levers remain the same: holding period, position sizing, brokerage and charges, and keeping clean records for your return.
Because tax rules, thresholds and your personal situation vary, treat this article as orientation and confirm your own treatment with a chartered accountant. For the risk side of the derivatives story, read our breakdown of SEBI's FY26 F&O study.
STT on futures: 0.05%. STT on options premium and exercise: 0.15%. Effective 1 April 2026. Equity STCG: 20% (under 12 months). Equity LTCG: 12.5% above ₹1.25 lakh (over 12 months). Rates unchanged for FY 2026-27.
Frequently Asked Questions
Did Budget 2026 change capital gains tax on shares?
No. Equity short-term capital gains remain at 20% and long-term gains at 12.5% above the ₹1.25 lakh annual exemption for FY 2026-27, according to coverage of the Budget.
What is the new STT rate on futures and options?
From 1 April 2026, STT on futures is 0.05% and on options is 0.15% (premium and exercise), as announced in the Union Budget 2026-27.
Does the STT hike affect delivery-based share trading?
The Budget's STT increase was targeted at futures and options. Delivery trading is governed by its own STT and capital gains rules, which were not the focus of the 2026 changes. Confirm your specific situation with a chartered accountant.
Educational content only — not investment, tax or legal advice. Market figures are as reported in the sources named above at the time of writing (November 2026) and change quickly; verify current data and consult a SEBI-registered adviser or chartered accountant before acting.