On Budget Day 2026, there was no announcement of any cut in Short-Term Capital Gains (STCG) tax on equity investments.
While market participants had anticipated possible relief for short-term investors and traders, Finance Minister Nirmala Sitharaman did not propose any changes to STCG tax rates in the Union Budget 2026.
No change in STCG structure
- STCG tax on equity continues at the existing rate under current tax provisions.
- There were no changes to holding period definitions, tax slabs, or calculation methodology for short-term capital gains.
This means gains from equity investments sold within the prescribed short-term period will continue to be taxed as per the prevailing rules.
STT increased instead of STCG relief
Instead of offering tax relief, the Budget introduced a higher Securities Transaction Tax (STT) on futures trading.
- STT on futures has been increased from 0.02% to 0.05%, raising transaction costs for derivatives traders.
The move signals a clear policy intent to discourage excessive leverage and high-frequency trading, rather than incentivising short-term market activity.
Market impact
The lack of STCG relief, combined with a higher STT, led to immediate pressure on broking stocks, exchanges, and capital market intermediaries on Budget Day, as traders reassessed costs and near-term profitability.
Bottom line
- No cut in STCG tax
- No structural changes for short-term equity gains
- Higher STT increases trading costs, particularly in F&O
The Union Budget 2026 prioritises revenue stability and market discipline over short-term tax incentives for traders.
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