Zerodha to collect Rs 2,500 cr from STT hike in Budget 2024: Nithin Kamath

STT on derivatives hike in Budget 2024: While unveiling the Budget 2024 proposals, the first budget in the Modi 3.0 regime, FM Nirmala Sitharaman announced a slew of changes relating to stock markets

Nithin Kamath on India Budget 2024: Brokerage firm Zerodha is likely to collect Rs 2,500 crore from the hike in securities transaction tax (STT) from the current 0.01 per cent to 0.02 per cent, said Nithin Kamath, founder & chief executive officer (CEO) at Zerodha & Rainmatter.

In a post on X (formerly Twitter), Kamath said that the brokerage had collected Rs 1,500 crore as STT last year, which could now shoot up to Rs 2,500 crore per the new rates if the trading volumes do not drop.

"STT on options goes up from 0.062% to 0.1%. STT on futures goes up from 0.0125% to 0.02% from October 1st. We collected about Rs 1500 crores of STT last year, @zerodhaonline. If the volumes don't drop, this will increase to about Rs 2500 crores at the new rates," Kamath posted.

While unveiling the Budget 2024 proposals, the first budget in the Modi 3.0 regime, Finance Minister Nirmala Sitharaman announced a slew of changes relating to capital markets, including tweaks in the treatment of capital gains – both long-term and short-term – for listed and unlisted securities.

The FM also did away with the indexation benefit for taxation related to the sale of real estate, while cutting the capital gains tax on sale of property from the current 20 per cent to 12.5 per cent.

"While adjustments to short-term capital gains tax and STT might require adaptation, these changes can potentially encourage longer-term investment strategies, contributing to a more stable and mature market ecosystem. The rationalisation of the capital gains tax regime promises a simpler and more navigable landscape for investors, promoting greater participation. The increased exemption limit for long-term capital gains on listed securities is a boon for smaller players, encouraging them to invest and contribute to market growth," said Sarvjeet Singh Virk, Co-founder & MD, Shoonya by Finvasia.

The change in capital gains tax (increase) and increase in STT may be a near term sentiment spoiler, said Lakshmi Iyer, CEO-Investment & Strategy, Kotak Alternate Asset Managers, though as market focus moves to growth trajectory and earnings potential, the medium-to-long term case for equities remain intact.

“No increase in the government borrowing program and the sustained path to fiscal prudence could mean lower interest rates in the coming quarters. FPI continues to be net buyers in both equities and fixed income, which also adds to the liquidity flows from external sources," she added.