STT Hike: Rs 10,000 Crore Tax Gain Wipes Rs 10 Lakh Crore Off Market Value

• A recent STT hike aims for Rs 10,000 crore in additional tax revenue but caused an estimated Rs 10 lakh crore market cap erosion on Budget day.
• The move has drawn strong criticism from traders and brokers, who fear increased transaction costs, reduced derivatives activity, and lower brokerage revenues.
• While some see it as a way to curb retail speculation, others warn it will disrupt high-frequency trading and institutional strategies.
• Long-term investors welcome the hike to rein in speculative excesses, citing SEBI data showing most individual derivatives traders lose money.
• Market participants caution that higher tax rates could suppress volumes, making the government's projected Rs 73,700 crore STT target for FY27 difficult to achieve.

Why It Matters: The STT hike, while aiming for tax gains, faces criticism for potentially damaging market liquidity and participation.