Market representatives seek lower STT on cash market trades in pre Budget consultations

Market representatives have sought a lower STT on cash market trades, said sources. This discussion came up during Finance Minister Nirmala Sitharaman’s pre-budget consultations ahead of the Union Budget 2026-27 in February.

The representatives sought a lower STT – Securities Transaction Tax that’s applied when one trades on the exchanges – compared to derivatives. There was also a discussion on increasing household allocation to equities from 5 per cent to 8 per cent, said sources to Business Today TV.

The industry proposed that buyback tax be levied only on the profit component and not on the total payout.

There were also suggestions to align short-term dividend tax for domestic investors with the NRI rate. NRIs pay 20 per cent tax on short-term dividends, while domestic investors face up to 42 per cent.

Sitharaman began the second day of consultations with market representatives and was scheduled to meet representatives from the startup and manufacturing sectors. She is scheduled to meet representatives from banking, financial services & insurance (BFSI) and the information technology (IT) sectors on Wednesday.

As preparations for Union Budget 2026-27 took off, the finance ministry sought suggestions from trade and industry earlier this month on reducing compliances and improving stability in tax regimes. In a letter to industry and trade associations, the ministry stated that they may send suggestions for changes in the duty structure, rates and broadening of tax base on both direct and indirect taxes giving economic justification for the same. It also indicated that there should be no representations for tax giveaways, and reminded that goods and services tax (GST) related requests are not examined as part of the annual budget.