Zerodha’s Nithin Kamath decodes Budget 2024: Speculation ‘much more expensive’

Jul 24, 2024 09:57 AM IST

Zerodha co-founder Nithin Kamath said that the Budget 2024 will make speculation “much more expensive” and long-term investments less attractive. This will happen due to changes in the securities transaction tax (STT), he wrote in the Economic Times.

“The STT charged on options has been increased from 0.0625% to 0.1% of the option premium. The STT charged on futures has been increased from 0.0125% to 0.02% on the price of futures. This makes trading futures and options costlier now,” he noted.

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With these changes “speculation will soon become much more expensive”, he added.

As per the new STT rates cost of trading in select equity derivative transactions is set to increase by 60%. Nirmala Sitharaman has raised the STT on the sale of options from 0.0625% to 0.1% of the option premium value and on the sale of futures, from 0.0125% to 0.02% of the futures price. This means an increase from ₹62.5 to ₹100 per lakh on the premium value for options and from ₹12.5 to ₹20 per lakh for futures. The changes will take effect from October 1.

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Nikhil Kamath also said that there is a silver lining for entrepreneurs in the Budget. He said, “Earlier, private investments in startups attracted capital gains of 20%. This has now come down to 12.5%, in line with investing in listed securities.”

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Removal of angel tax is also good as it “was introduced as a way to stop people from setting up shell businesses to launder money. Unfortunately, it ended up hurting startups because to tax authorities, the high valuations of startups made them hard to distinguish from shell companies”, he said.