India Increases Stock Trading Tax Rates to Curb Speculation

India has raised certain stock trading tax rates in an effort to further curb retail speculative trading. According to Jin10, the budget proposal submitted to parliament on Sunday outlines an increase in the securities transaction tax on stock index futures from 0.02% to 0.05%. Additionally, the tax rate on option premiums and option exercises has been raised from 0.1% to 0.15%. This announcement led to a sharp decline in the stock market, with India's major index, the NIFTY 50, dropping nearly 3% during intraday trading. Shares of the Bombay Stock Exchange (BSE), India's second-largest securities exchange, and brokerage firms like AngleOne also saw significant declines. This move underscores India's determination to curb speculative trading, as the influx of retail traders has positioned India as the largest market for contract trading volume globally. Regulatory bodies had previously introduced several restrictive measures at the end of 2024, including limiting each exchange to one weekly index option contract.