Sensex is down 1,200 points, and Nifty loses 1.77% as FM raises STT and modifies LTCG.
Domestic stock market indices, the Sensex and the Nifty, fell more than 1.5 percent in afternoon trades after Finance Minister Nirmala Sitharaman announced plans to increase the securities transaction tax (STT) on futures and options (F&O) and long-term capital gains (LTCG) on financial and non-financial assets.
During intraday sessions, the BSE’s 30-share index Sensex lost more than 1,200 points, or 1.6%, to a low of 79224.41, while the NSE’s Nifty sank 435.09 points, or 1.77 percent, to a day’s low of 24,074.2. However, both indices recovered afterward.
While announcing the Union Budget 2024–25, Sitharaman suggested raising the STT on futures and options securities to 0.02 percent and 0.1%, respectively.
STT is a direct tax imposed on the acquisition and sale of securities listed on stock exchanges. Previously, the STT for the selling of futures in securities was 0.0125 percent. The tax on the sale of an option in securities was 0.0625 percent (on the seller) and 0.125 percent (on the purchaser).
The hike in STT on F&O coincides with a boom in volumes in the industry, which has concerned market regulators SEBI and the Reserve Bank of India.
Sitharaman also recommended raising long-term capital gains on all financial and non-financial assets to 12.5% from 10% before. She stated that short-term capital gains tax on specific financial assets will be levied at a 20% rate, while all other financial and non-financial assets will continue to be subject to the relevant tax rate.FM recommended raising the capital gains exemption ceiling on some financial assets to Rs 1.25 lakh per year to help the poor and medium income levels.
