Mixed Cues: Higher STT on F&O, Tax Holiday for Data Centers from April 1

Several new tax laws and budgetary provisions, including an increase in Securities Transaction Tax (STT) on Futures & Options (F&O) trades, a 20-year tax holiday for data center services, and new safe harbour rules for software firms, became effective from April 1, 2026. Additionally, lower Tax Collected at Source (TCS) on overseas tour packages and LRS remittances for medical/education purposes also commenced.

This package of changes presents a mixed bag for the Indian market. The higher STT could potentially dampen F&O trading activity, impacting revenue for broking houses. Conversely, the tax holiday for data centers and favorable rules for software firms are significant positive catalysts for these growth-oriented sectors, potentially attracting more investment and boosting profitability. Changes in TCS could influence consumer spending patterns on international travel and education.

Broking firms (e.g., Angel One, Zerodha's listed peers) might face negative pressure due to potential reduction in F&O trading volumes. Data center operators and IT services companies like TCS, Infosys, Wipro, HCLTech, and Coforge are likely to see positive sentiment due to tax benefits and improved compliance. Travel and tourism companies such as IRCTC and Easy Trip Planners could experience mixed effects, with lower TCS potentially boosting demand for overseas packages.

Traders should closely monitor F&O trading volumes reported by exchanges and broking firms in the coming quarters to gauge the actual impact of higher STT. For IT and data center stocks, watch for management commentary on the benefits of the new tax regimes and any increased investment plans. Observe booking trends for overseas travel to assess the effectiveness of lower TCS rates.

• •New tax laws and budgetary provisions take effect April 1.
• •Higher STT on F&O trades will be implemented.
• •Lower TCS on overseas tour packages and LRS remittances for medical/education will commence.
• •A 20-year tax holiday for data centre services begins.
• •New safe harbour rules for software firms also commence with the 2026-27 fiscal year.