Changes in Security Transaction Tax (STT):
Our hon’ble Finance Minister, Smt. Nirmala Sitharaman has increased the securities transaction tax on options and futures.
STT levied on the sale of options has increased to 0.062% from 0.05%. In simple terms, options traders will have to pay Rs.6200/- for every turnover worth Rs.1 crore, where they currently pay Rs.5000.
STT levied on the sale of futures has increased to 0.0125% from the existing 0.01%. In simple terms, futures traders will have to pay Rs.1250/- for every turnover worth Rs.1 crore, where they currently pay Rs.1000.
Traders are also subject to charges like GST, brokerage, stamp duty, etc. This increase will affect the trading volume in the short term. This move may not affect option buyers but will affect option sellers who sell regularly.
Transaction Charges Levied On Trading Members:
On 24th March 2023, NSE reduced the transaction charges levied on its trading members ™ in the cash market and equity derivatives segment. The exchange had increased the charges by almost 6% from 01.01.2021 to fund the NSE Investor Protection Fund (NSE IPFT), but now NSE has reduced the charges bringing them back to rates that existed before 01.01.2021.
NSE has established an Investor Protection Fund Trust (NSE IPFT) to safeguard the investors’ interest, promoting investor education, awareness, and research. NSE IPFT compensates investors if defaulters’ assets are insufficient to meet the admitted claims of investors.
SEBI, in consultation with NSE, calculated that the project of NSE IPFT required a fund of Rs.1500 crores. SEBI had also directed NSE to multiply the sources of the fund by levying additional charges on trading members ™ based on trading volumes.
Now, NSE plans to systematically collect funds for NSE IPFT by increasing the contribution to Rs.10 per crore of traded value in cash equity and futures segment and Rs. 50 per crore of traded premium value in equity options from the existing Rs. 0.01 per crore.
This change in transaction charges and contributions will effectively reduce by almost 4% in overall transaction charges. The proposed change will be effective from 01.04.2023.