Budget 2026: STT, STCG Tax Cuts Could Ignite Share Market Rally

• Stock investors faced pressure in 2025 and 2026, leading to high expectations from Finance Minister Nirmala Sitharaman's Union Budget on February 1.
• Market experts suggest that abolishing Securities Transaction Tax (STT) and reducing Short Term Capital Gains (STCG) tax could significantly boost the stock market.
• In Union Budget 2024, STT on options and futures contracts was increased, and Long Term Capital Gains (LTCG) tax was raised from 10% to 12.5%, while STCG went from 15% to 20%.
• Some experts recommend completely abolishing STT in the cash market, which currently levies 0.1% on both buy and sell sides of equity delivery transactions.
• Despite foreign fund selling, domestic retail investors have shown strong confidence, with average monthly SIP investments increasing significantly, indicating potential for further participation with tax rationalization.

Why It Matters: Anticipated tax reductions on STT and STCG in Budget 2026 are crucial for revitalizing the Indian share market.