Union Budget 2019: Option traders get tax relief
Securities transaction tax will now be levied only to the difference between settlement and strike price in case of exercise of options.
Mumbai: The traders in equity derivative market got some concessions from higher taxation imposed on them while trading in underlying options of a listed company’s securities. Securities transaction tax will now be levied only to the difference between settlement and strike price in case of exercise of options.
“I propose to give relief in levy of Securities Transaction Tax (STT) by restricting it only to the difference between settlement and the strike price in case of exercise of options,” finance minister said.
Sale of an option in securities attract STT of 0.05 per cent for the seller while sale of an option in securities where the option is exercised by the purchaser is 0.125 per cent, and sale of a future contract insecurities attract a STT of 0.01 per cent.
Romesh Tiwari, head of research, CapitalAim said, “The proposal to restrict the STT to the difference between settlement and strike price will make equity options traders happy with less tax.”