Nithin Kamath Shares his views on Union Budget 2024

Nithin Kamath, co-founder of Zerodha, expressed concerns over Budget 2024’s impact on speculation and long-term investments. In a recent article in the Economic Times, Kamath highlighted changes in the securities transaction tax (STT) that make trading in futures and options more expensive, potentially discouraging speculative activities in the stock market.

Increased STT Rates says Nithin Kamath:

Budget 2024 introduced higher STT rates on equity derivative transactions. The STT on options has been increased from 0.0625% to 0.1% of the option premium value. While the STT on futures has been raised from 0.0125% to 0.02% of the futures price.

This translates to 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. These changes are set to take effect from October 1.

Impact on Speculation and Investments:

Kamath noted that these changes would make speculation “much more expensive,” as the cost of trading in certain equity derivative transactions could increase by up to 60%. The higher futures and options trading costs could deter speculative trading activities, potentially shifting investor focus towards other investment forms.

Silver Lining for Entrepreneurs:

Despite the concerns over increased STT rates, the Budget has some positive aspects for entrepreneurs. Nikhil Kamath, another co-founder of Zerodha, pointed out a reduction in capital gains tax for private investments in startups. Previously, these investments attracted a capital gains tax rate of 20%. It has now been reduced to 12.5%, aligning with the tax rate for investing in listed securities.

Removal of Angel Tax:

Another positive development in the budget is removing the angel tax, which was initially introduced to curb money laundering through shell companies.

Nikhil Kamath explained that the tax had unintentionally affected startups, making it difficult for tax authorities to distinguish between genuine high-valuation startups and shell companies. Removing this tax is expected to ease the burden on startups and encourage more investments in the sector.

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