New Delhi: Union Finance Minister Nirmala Sitharaman on Sunday delivered the Union Budget 2026 with a clear twin message for markets and the economy rein in excessive speculation while pushing long-term growth through public investment, technology, and infrastructure. The Budget, presented in an 85-minute speech in the Lok Sabha from 11 am to 12:25 pm, proposed a sharp hike in Securities Transaction Tax (STT) on futures and options (F&O) trades, triggering an immediate sell-off in brokerage stocks, even as it unveiled a wide-ranging reform and spending agenda.
In one of the most market-sensitive announcements, Sitharaman proposed a steep increase in STT on derivatives to cool what regulators have repeatedly flagged as an overheated and loss-heavy F&O market dominated by retail traders.
“I propose to raise the STT on futures to 0.05 percent from the present 0.02 percent. STT on options premium and exercise of options are both proposed to be raised to 0.15 percent from the present rates of 0.1 percent and 0.125 percent respectively,” the finance minister said.
In simple terms, the move more than doubles the tax on futures and significantly raises the cost of buying, selling, or exercising options. Every F&O trade will now cost more, making frequent, high-volume speculative trading less attractive precisely the outcome the government and regulators appear to be aiming for.
The Street reacted instantly. By around 12:30 pm, shares of BSE were down nearly 14 percent, while brokerage firms Angel One and Nuvama Wealth fell about 10 percent each. The NSE Capital Market index slipped close to 6 percent, reflecting concerns that lower derivatives volumes could dent brokerage revenues.
The move follows repeated warnings from the Securities and Exchange Board of India (SEBI), whose studies show that nearly nine out of ten individual traders in the F&O segment consistently lose money. Industry executives had also argued that higher transaction costs could help redirect trading activity back to the cash market.
Veteran investor Shankar Sharma welcomed the decision bluntly, calling derivatives “poison x cocaine” for young traders in a post on X. “It cannot be stopped, but it can be taxed the hell out of. Kudos to the finance minister,” he wrote. Kotak Securities MD and CEO Shripal Shah said the increase was likely to raise impact costs and cool volumes, describing the intent as “volume moderation rather than revenue maximization.”
Portfolio manager Divam Sharma noted that the hike signals a policy shift toward closer scrutiny of speculative activity. He added that while the immediate impact on brokerage business models may be limited, the real test will be how derivatives volumes behave over the next few quarters.
Recent SEBI data already pointed to a slowdown in late 2025, with average daily turnover in futures falling 11 percent month-on-month and options premium turnover down 8 percent, even though options volumes remained higher than a year earlier.
What changed at a glance:
• Futures STT: Increased from 0.02% to 0.05%
• Options STT on premium: Increased from 0.10% to 0.15%
• Options STT on exercise: Increased from 0.125% to 0.15%
Beyond markets, Sitharaman said Budget 2026 rests on three broad priorities accelerating economic growth, building people’s capacities, and ensuring equitable access to opportunities. Proposals spanned taxation, social welfare, infrastructure, and emerging sectors such as artificial intelligence and advanced manufacturing.
Public capital expenditure was raised to Rs 12.2 lakh crore for FY27, up from Rs 11.2 lakh crore in the current fiscal, underlining the government’s continued bet on infrastructure-led growth, including projects in tier-2 and tier-3 cities.
Key Announcements in Budget 2026
Among the major initiatives announced were:
Biopharma SHAKTI: Rs 10,000 crore over five years to position India as a global hub for biologics and biosimilars.
India Semiconductor Mission (ISM) 2.0: A renewed push to strengthen domestic semiconductor manufacturing and supply chains.
Customs Duty Relief: Extended exemptions for capital goods used in lithium-ion battery cell manufacturing.
Tax Holiday for Global Cloud Services: Proposed exemption until 2047 for foreign firms operating through Indian data centres.
Healthcare & Education: Support for five regional medical hubs, five university townships near industrial corridors, and a girls’ STEM hostel in every district.
High-Speed Rail: Development of seven high-speed rail corridors as “growth connectors.”
Tax Compliance Changes: Extended deadline for revising returns to March 31 with a nominal fee; revised timelines for ITR filings; and simplified TDS procedures on immovable property sales by non-residents.
Sitharaman’s 85-minute Budget 2026 speech was shorter than many of her earlier addresses. While most of her Budget speeches have ranged between 90 and 120 minutes, her longest was in 2020 at 2 hours and 42 minutes. The 2019 speech lasted 2 hours and 17 minutes, while the shortest came in 2024 at exactly one hour.
As soon as the speech concluded, social media erupted with memes capturing public sentiment from tax relief hopes to middle-class anxieties. One widely shared line read, “The whole mood of February depends on one woman,” while another joked, “Budget 2026 ki asli jaanch: wallet ka weight, patience ka test, aur memes ka festival.” The humour underscored how deeply Budget Day resonates with everyday citizens.
The Opposition, however, was unimpressed. Congress general secretary Jairam Ramesh termed the Budget “totally lacklustre” and accused the government of non-transparency. “After 90 minutes, it is clear that Budget 2026/27 falls woefully short of the hype. The speech gave no idea whatsoever of allocations for key programmes and schemes,” he said in a post on X.
Another Congress leader, KC Venugopal, alleged that the Budget favours big corporates over common people. “There is nothing in it for ordinary citizens. It is completely hollow,” he said.
Taken together, Budget 2026 signals a firmer regulatory stance on speculative excesses, particularly in derivatives trading, while doubling down on state-led investment, technology, and long-term capacity building. As markets digest the immediate shock of higher F&O costs, the broader impact will unfold over the coming months—both in trading behaviour and in how effectively the government’s growth ambitions translate on the ground.