Zerodha co-founder Nithin Kamath has flagged concerns over the Securities Transaction Tax (STT), saying that as a market participant, he had always hoped that the Budget would reduce the levy, but it has instead continued to rise.
In an X (formerly Twitter) post, he noted that STT was introduced when long-term capital gains (LTCG) tax was made zero, but with LTCG now back, the overall tax burden on investors has increased.
STT was introduced in India on 1 October 2004 under the Finance Act, 2004. It was implemented to replace LTCG, simplify tax collections, and reduce tax evasion on the sale and purchase of equities and derivatives. However, LTCG on listed equities was reintroduced in India in the Union Budget 2018, while STT was not rolled back.
Referring to the 60% rise in STT on futures and options in the Budget 2024, Kamath said the increase didn’t impact trading volumes much at first as the bull market continued and more people participated in the process. However, he added that markets do not always have bull runs, and the real impact of higher taxes became visible over the past year.
Kamath outlines STT collection
According to the executive, the projected STT collections for the financial year 2025-26 were ₹78,000 crore. However, collections so far (11 January) stand at around ₹45,000 crore.
He further said that even if it is estimated that another ₹12,000 crore in STT will be collected by March-end, that would bring the total to ₹57k crore, which is nearly 25% lower than the projection.
“I think the government would’ve collected a lot more without the 2024 hike,” Kamath said, ending the post with a reminder that the Union Budget 2026 will be presented on a Sunday this year.
Speaking of the upcoming Budget presentation, he notified users that “Markets are open. We’re one of the few brokers that allow BTST trades on Sunday, and you won’t get same-day NAV when buying MFs on Sunday.”
Zerodha executive’s previous remarks on STT
This is not the first time that Kamath has spoken about the concerns surrounding STT. Earlier, he has described the levy as a key factor behind the country’s surging options trading volumes, along with noting that the tax now exceeds the brokerage fees collected by his platform.
In a LinkedIn post, Kamath argued that STT has become the “biggest tax that traders pay,” significantly influencing where and how they trade. “At Zerodha, the STT we collect and pass on to the government is higher than the brokerage we earn,” he said.
