Lagatar24 Desk
New Delhi: On Tuesday, Finance Minister Nirmala Sitharaman announced significant tax reforms in the Union Budget, including a hike in the securities transaction tax (STT) on futures and options (F&O) trading.
“Increasing the STT on the sale of an option in securities from 0.0625% to 0.1% of the option premium, and on the sale of futures in securities from 0.0125% to 0.02% of the traded price, is proposed,” she stated during her budget speech.
This announcement follows the Economic Survey’s warning about the rising interest of retail investors in derivative trading, which it described as speculative and unsuitable for a developing economy. The survey highlighted that derivative trading encourages gambling behavior due to the potential for substantial gains.
Sitharaman also declared an increase in both long-term and short-term capital gains taxes. Short-term capital gains on “specified” financial assets will now attract a 20% tax rate, up from 15%. Long-term gains on all financial and non-financial assets will see a tax rate increase from 10% to 12.5%.
Listed financial assets held for over a year are considered long-term, while unlisted financial assets and all non-financial assets must be held for at least two years to be classified as long-term. Unlisted bonds, debentures, debt mutual funds, and market-linked debentures will be taxed on capital gains at applicable rates regardless of the holding period.
To support the startup sector, Sitharaman proposed abolishing the angel tax for all classes of investors, a move praised by former finance minister P. Chidambaram.
