Stock Market Changes from October 1: What Investors Need to Know
Three significant changes will take effect in the stock markets on October 1, and investors need to be aware of these adjustments to navigate potential challenges and seize new opportunities. These changes include revised transaction charges, an increase in Securities Transaction Tax (STT), and new taxation rules governing share buybacks.
Revised Transaction Charges
Starting October 1, the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) will implement new transaction fees for cash, futures, and options trading. This shift follows a directive from the Securities and Exchange Board of India (SEBI). For example, the BSE has adjusted its transaction fees for Sensex and Bankex options contracts to ₹3,250 per crore of premium turnover.
On the NSE, the cash market transaction fee will be set at ₹2.97 per lakh of traded value. Equity options will attract a fee of ₹35.03 per lakh of premium value.
Increase in Securities Transaction Tax (STT)
Finance Minister Nirmala Sitharaman announced an increase in STT on futures and options trading. Effective October 1, the STT on futures will rise from 0.0125% to 0.02%. Options trading will see an increase from 0.0625% to 0.1%.
Analysts suggest this hike may dampen trading volumes, potentially affecting revenues for exchanges and SEBI.
New Taxation Rules on Share Buybacks
Another significant change is the taxation of income from share buybacks. This will now be treated as dividend income for shareholders, effective October 1. This shift means shareholders will be taxed according to their applicable income tax slabs when companies repurchase their shares.
The change allows companies greater flexibility in utilizing funds for growth initiatives instead of being constrained by tax liabilities associated with buybacks.
