RAS question
By what percentage was the Securities Transaction Tax (STT) on futures contracts increased in Budget 2026-27?
Correct answer: (C) 150% (from 0.02% to 0.05%).
In Budget 2026-27, the Securities Transaction Tax on futures contracts was increased by 150%, from 0.02% to 0.05%.
Explanation
Budget 2026-27 raised the Securities Transaction Tax on futures from the existing 0.02% to 0.05%, effective 1 April 2026. The arithmetic is the key: the rate went up by 0.03 percentage points, and 0.03 is 150% of the old 0.02% rate, so the increase was 150%, not merely a 0.03 percentage-point change. The Budget Speech separately says STT on options premium and exercise of options was proposed at 0.15% from the earlier 0.1% and 0.125% rates respectively. The derivatives-tax hike also triggered a major market selloff on Budget Day.
Why the other options are wrong
- (A) A 50% increase would take a 0.02% futures STT rate only to 0.03%, while the Budget Speech raised it to 0.05%.
- (B) A 100% increase would double 0.02% to 0.04%, but the notified futures STT figure in the Budget Speech was 0.05%.
- (D) A 200% increase would take 0.02% to 0.06%, which is higher than the 0.05% futures STT stated in the Budget Speech.
Concept
This tests Budget taxation in the capital-market segment, especially how changes in transaction taxes are read from official budget documents. It recurs in RAS because fiscal measures affecting securities markets are a standard Indian Economy current-affairs theme.