Securities Transaction Tax (STT) collections surged 52.9% in the first half of the current financial year, with the government having collected ₹40,214 crore between 1 April and 17 September 2026, according to official data. That compares with ₹26,306 crore collected in the same period last year, reflecting both higher securities market activity and a deliberate upward revision of STT rates on derivatives that took effect from 1 April 2026.

Rate Hikes Drive the Jump

The sharp rise in collections is directly linked to rate increases introduced in the FY27 Union Budget. The STT on the sale of futures contracts was raised to 0.05% from 0.02%, while the STT on the sale of options in securities was hiked to 0.15% from 0.10% — both with effect from 1 April 2026. Together, these revisions have materially expanded the tax base on high-volume derivative segments.

How STT Is Calculated

STT is levied on specified sell transactions involving securities, including futures and options. For futures, the tax is calculated on the actual traded value. For options, it is generally applied to the premium, except in the case of final exercise, where it is charged on the settlement price on the day of exercise — provided the contract is in the money. For equity-oriented mutual funds, STT applies to both the sale of units on a recognised stock exchange and the repurchase of such units by the mutual fund.

Where Collections Stand Against Targets

The government has set a full-year STT collection target of ₹73,700 crore for FY27. At ₹40,214 crore in just the first half, the pace of collections suggests the target is well within reach, barring a sharp downturn in market activity in the second half. The broader direct tax collection target for FY27 stands at ₹26.97 lakh crore — 18.1% higher than the FY26 level — as part of an overall tax collection goal of ₹44.04 lakh crore, representing a 9.4% increase year-on-year.

Broader Tax Collection Picture

Net direct tax collections for the same April–September period rose 13% year-on-year to ₹12.124 lakh crore, according to data released by the Finance Ministry. Corporate tax collections were a key driver, posting nearly 20% growth. The net direct tax collections so far represent approximately 45% of the full-year direct tax target. Notably, this is the second consecutive year in which STT receipts have outpaced projections at the half-year mark, underscoring sustained retail and institutional participation in equity derivatives.

What to Watch

The trajectory of STT collections in the second half will depend on equity market volumes, particularly in the F&O segment, which accounts for the bulk of taxable transactions. A sustained rally or elevated volatility — both of which drive derivative volumes — would further support collections. Any regulatory action by SEBI to curb speculative F&O trading, a subject of ongoing policy debate, could dampen the pace.