LTCG Tax on Shares and STT: What FM Sitharaman Said, and What It Means for Your Taxes
LTCG tax on shares is back in focus. On October 13, 2026, Finance Minister Nirmala Sitharaman said investors in India and abroad had been debating long-term capital gains (LTCG) tax and securities transaction tax (STT), and that the government was open to hearing their views, but she declined to commit to any change ahead of the Union Budget, ANI reported. The Sensex rose about 1,109 points that day.
Nothing has changed in the tax rules yet. Today, gains on listed shares held for more than 12 months are taxed at 12.5% above an annual exemption of ₹1.25 lakh, and STT is charged on every trade. So what exactly did the Finance Minister say, and how much tax do you actually pay now?
Key Takeaways
- Sitharaman called the debate on STT healthy and said she would keenly hear views, but gave no commitment on changes.
- The Sensex closed at about 73,034 and the Nifty 50 at 22,721.95 on October 13, up about 1.5–1.6%.
- Current equity LTCG: 12.5% on gains above ₹1.25 lakh a year; STCG: 20%.
- STT on futures rose to 0.05% and on options to 0.15% in Budget 2026.
- Any change would most likely come only through the next Union Budget, which Bloomberg said is due in February.
What Exactly Did the Finance Minister Say?
Speaking at the Bloomberg New Economy Forum in New Delhi, Sitharaman said LTCG tax, STT and how different asset classes are taxed remained important subjects for investors, and that it was premature to comment on possible measures with the Budget coming up, according to ANI. She described the debate over STT as healthy and said she would be keenly hearing the views, Bloomberg reported.
She also pointed to a long-running argument: some investors say they should not have to pay both LTCG tax and STT on the same investment, The Federal reported. That history matters. STT was introduced when LTCG on listed equity was removed, and LTCG was brought back in Budget 2018 while STT stayed in place, IANS noted.
Important: these were comments, not a policy announcement. No change to LTCG or STT has been confirmed.
How Did the Stock Market React?
The Nifty 50 rose 1.6% to close at 22,721.95, its biggest single-day percentage gain since August 3, and the Sensex gained 1.5% to 73,033.78, a report carried by TradingView said. The rally came after the Nifty had fallen in eight of the previous nine weeks amid sustained foreign selling. Foreign portfolio investors had withdrawn ₹3,07,719 crore from Indian equities in 2026 so far, Business Today reported.
Market-linked stocks are often the most sensitive to STT news. Investors tracking that theme can follow BSE and CDSL on GoPocket.
What Are the Current LTCG, STCG and STT Rates?
| Item | Current rule (FY27) |
|---|---|
| LTCG on listed shares and equity mutual funds (held over 12 months) | 12.5% on gains above ₹1.25 lakh per financial year |
| STCG on listed shares (held up to 12 months) | 20% |
| STT on equity futures (sale) | 0.05% of traded value (was 0.02%) |
| STT on options (premium on sale) | 0.15% (was 0.10%) |
| STT on exercised options | 0.15% (was 0.125%) |
Sources: IANS and Outlook Money on Budget 2026 STT changes; LTCG and STCG rates as set in Budget 2024. Cess and surcharge apply as per your income.
The Budget 2026 STT hike was steep: 150% on futures and 50% on options. The Sensex fell more than 1,500 points on Budget day, February 1, 2026, Outlook Money reported.
GoPocket Calculation: How Much Tax Does a Long-Term Investor Pay Today?
Here's a simple example to show how LTCG and STT stack up for a delivery investor. Assume you buy shares worth ₹10 lakh, hold them for more than a year, and sell them for ₹13 lakh. You have no other capital gains that year.
| Step | Amount |
|---|---|
| Long-term gain | ₹3,00,000 |
| Less annual exemption | ₹1,25,000 |
| Taxable LTCG | ₹1,75,000 |
| LTCG tax at 12.5% | ₹21,875 (₹22,750 with 4% cess) |
| STT on delivery trades (0.1% on buy and on sell) | ₹1,000 + ₹1,300 = ₹2,300 |
| Total LTCG tax + STT | About ₹24,175 before cess, or roughly 8% of the gain |
Illustrative calculation by GoPocket. Excludes surcharge, brokerage, exchange charges, GST and stamp duty.
This example shows why the debate exists. For a long-term investor, LTCG is the much bigger cost; STT is small by comparison. For a frequent derivatives trader, it's the reverse. Selling futures worth ₹10 lakh now attracts ₹500 of STT, up from ₹200 before April 2026. That cost applies whether the trade makes money or not.
What Could Change, and What Probably Won't Change Soon?
Several proposals are being discussed publicly. SBI Research has called for abolishing LTCG tax on equities, Business Today reported. Others argue for a higher exemption limit or for removing STT for investors who already pay LTCG. These are suggestions, not government plans.
Three realities are worth keeping in mind:
- Timing. Tax changes usually come through the Union Budget. Until then, current rules apply to every sale you make.
- Revenue. LTCG and STT bring in meaningful revenue, and the FM also stressed fiscal prudence, according to ANI. Any cut would need to be balanced against that.
- Market expectations. If the Budget doesn't deliver relief, the October 13 optimism could reverse. The rally should not be read as confirmation of a tax cut.
What Can Investors Do Now?
- Don't change plans on speculation. Delaying a sale in the hope of a future tax cut is a bet on policy, not a plan.
- Use the ₹1.25 lakh exemption each year. Spreading long-term gains across financial years can reduce tax legally.
- Track holding periods. Selling one day before completing 12 months moves gains from the 12.5% to the 20% rate.
- Know your trading costs. F&O traders should factor the higher STT into every strategy.
Market moves on the day also lifted IT stocks; read our HCL Tech Q2 FY27 results analysis. Track the Nifty 50 on GoPocket.
Sources
- ANI, FM Sitharaman keeps LTCG, STT changes open ahead of union budget, October 13, 2026
- Bloomberg, Indian Stocks Rise on Sitharaman's Comments on Transaction Tax, October 13, 2026
- Business Today, Sensex, Nifty extend gains on FM Sitharaman's LTCG tax, STT remark, October 13, 2026
- The Federal, Sensex jumps 1,109 pts as Sitharaman's LTCG, STT remarks spark Budget hopes, October 13, 2026
- TradingView (news report), Stocks jump as Sitharaman says government will hear investors on LTCG tax, October 13, 2026
- IANS, FM Sitharaman hikes STT on futures to 0.05 pc in Budget 2026, February 1, 2026
- Outlook Money, What Budget 2026 Means For You, February 2026
Disclaimer: This article is for information and educational purposes only and is not tax or investment advice. Tax rules can change and depend on your individual circumstances. Consult a qualified tax professional or SEBI-registered investment adviser before making decisions.
