Zerodha's Nithin Kamath Warns Government: STT Hike Reduces Trading, Impacts Tax Collection

• Nithin Kamath, Zerodha co-founder, criticizes continuous increase in Securities Transaction Tax (STT), stating it reduces trading activity and harms government tax collection.
• STT was introduced as an alternative when Long Term Capital Gains Tax (LTCG) was abolished, but continued to rise even after LTCG was reintroduced.
• Budget 2024 saw a significant 60% increase in STT on Futures and Options (F&O) trades, with futures rising from 0.0125% to 0.02% and options from 0.0625% to 0.1%.
• Kamath notes that while a bullish market initially masked the impact, a market slowdown revealed declining trading volumes and reduced participation from small and mid-level traders.
• STT collection for FY 2025-26 is projected to be around 57,000 crore rupees, significantly below the target of 78,000 crore rupees, indicating a 25% shortfall.

Why It Matters: Nithin Kamath warns that increased STT is detrimental to trading, investment, and long-term government revenue.