Budget 2026 | Option to put a price on risk may mean we pay a price in future: Nithin Kamath

The government wants to stay fiscally disciplined. It has raised capex year after year, but it has tried to avoid borrowing too much and kept some room in case something goes wrong. With the global uncertainty right now, this was always going to be a tough budget.

That said, I was hoping there aren’t any big negatives for the capital markets. Last year was mostly a non-event. This year it isn’t.

The most immediate change you’ll feel is in the cost of trading. The STT increase, for futures from 0.02% to 0.05%, and options from 0.1% to 0.15%, isn’t insignificant. This is not what I was hoping for, and the market reacted negatively.

We’ve known for a while that the government and regulators weren’t comfortable with the explosion in retail F&O volumes, and this is them putting a price on it. For active traders, it simply means higher friction and a higher break-even. Volumes might take a hit, considering we aren’t in a bull market anymore, like it was the last time STT was increased in the 2024 budget.

Beyond trading costs, there’s the change around Sovereign Gold Bonds (SGBs) that would have caught many off guard. Many people buy SGBs in the secondary market because they often trade at a discount, and they assume they could still avoid capital gains tax if they held them to maturity. But now, the capital gains exemption at redemption will apply only if you subscribed in the original issue and held it continuously till maturity. If you bought SGB from the secondary market, you won’t get this exemption. The budget also tweaked the buyback story again. After budget 2024, it treated buybacks like dividends and taxed them at slab rates. That made buybacks less attractive for retail investors. Now it shifts buybacks back to capital gains treatment in the shareholders’ hands, which makes them more tax-friendly again.

On the brighter side, the budget takes a serious shot at making corporate bonds easier to buy and sell. It talks about market-making, bond index derivatives and Total Return Swaps. The words sound complex, but the idea is simple: increase liquidity. And the bond market needs a lot more liquidity if we want more risk capital to come into this asset class.
Finally, the budget signalled support for sectors that can improve export competitiveness, like deep-tech startups (like BESS), manufacturing and defence. That’s the kind of direction we, as an ecosystem, also try to support through Rainmatter. But we’ll have to wait for the fine print to understand what this will actually look like on the ground.