On Budget Day 2026there 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 tradingrather 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 costsparticularly in F&O

The Union Budget 2026 prioritises revenue stability and market discipline over short-term tax incentives for traders.

Disclaimer: The information provided is for informational purposes only and should not be considered financial or investment advice. Stock market investments are subject to market risks. Always conduct your own research or consult a financial advisor before making investment decisions. Author or Business Upturn is not liable for any losses arising from the use of this information.