In a major relief to options buyers, the budget has proposed that securities transaction tax (STT) be calculated on the difference between the strike price and settlement price instead of the value of a contract.
Analysts believe this is beneficial for options buyers, although it might affect ‘In the Money’ option sellers. But overall, the move would boost volumes and participation in the options segment.
As of now, STT is charged on the entire value for “In the Money” strikes on the buying side, at 0.125%. For instance, a Nifty option with a strike price of Rs 11,800 expires In the Money at a spot price of Rs 11,900. It would have cost around Rs 1,116 per lot (11900 x 75 x 0.125%). But with the changes, the same would attract an STT of just Rs 9.375 per lot (11900-11800)*75*0.125%).
Source : Financial Express