Rajya Sabha MP Raghav Chadha has demanded that the government abolish the Long-Term Capital Gains Tax (LTCG) on equities for individual investors. The demand comes after the Finance Minister Nirmala Sitharaman announced an increase in Securities Transaction Tax (STT) on derivatives trading in the Union Budget 2026-2027.
Speaking during the Budget discussion in the upper house of the Parliament, the Aam Aadmi Party MP welcomed the STT hike on futures & options (F&O) trading, but urged the Finance Minister to make LTCG on equities nil for individual investors, in line with many other countries, to avoid disincentivising investors.
STT was introduced in 2004 by the then Finance Minister P. Chidambaram to replace LTCG and curb tax evasion, covering equity and derivatives.
On February 1, 2026, FM Sitharaman proposed increasing STT by 150% on futures transactions and by 50% on options transactions. As per the Budget proposal, STT on futures will be increased to 0.05% from 0.02%, and STT on options transactions will be raised to 0.15% from 0.01%.
Chadha praised the government’s move to hike the STT on F&O trades, as it can curb reckless speculation, noting that nearly 90% of retail investors lose money in derivatives.
“I welcome the hike in STT (security transaction tax) on derivatives as it can curb reckless speculation. Nearly 90% of retail investors lose money in F&O, turning markets into gambling. When STT was originally introduced, LTCG was zero. But now with both STT and LTCG in place, investors are disincentivised. I urge the govt to abolish LTCG on equities for individuals, as done in Switzerland, Singapore, UAE & others,” Chadha wrote in a post on X, with a video of his Rajya Sabha speech on Monday, February 9.
He believes this will boost household wealth, reduce speculation, and shift savings from gold and real estate into equities.
“My Demand: Make Long Term Capital Gain TAX on Equities NIL for individual investor,” Chadha wrote.
What is STT?
STT is a direct tax levied by the government on every purchase and sale of securities through recognised stock exchanges. This includes equity shares, futures, and options. It is deducted upfront at the time of the trade, regardless of the investor's profit or loss.
