India hikes securities transaction tax on futures, options contract
Corrects paragraph 2 after government says STT on options contracts will rise to 0.0625% from 0.05%; changes sourcing in headline and text
NEW DELHI, March 24 (Reuters) -India has raised the securities transaction tax (STT) on futures and options contracts, the government said, citing amendments to the finance bill, 2023, passed by the lower house of the parliament on Friday.
The government hiked STT on options contracts to 0.0625% from 0.05%, thefinance ministry said.
The STT for futures has been hiked to 0.0125% from 0.01%, the government added.
The increases would be effective from April 1.
"The increase in STT will specially impact high frequency traders (HFTs). Any change in the cost structure has a material impact due to the thin spread in which HFTs operate," said Rajesh Gandhi, partner, Deloitte Haskins and Sells LLP.
Moreover, foreign portfolio investors do not get a deduction for STT while computing capital gains on derivatives, Gandhi said.
Reporting by Aftab Ahmed and Jayshree P. Upadhyay; Editing by Savio D'Souza and Sohini Goswami
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