\'Abandoned baby of Indian markets...\': Zerodha co-founder Nithin Kamath laments high STT on intraday equity

Time leverage curbs and higher STT have dampened intraday equity volumes, Zerodha co-founder Nithin Kamath wrote in a post on X. 

Kamath said despite a significant bull run, intraday trading hasn't picked up as expected.

SEBI's intraday leverage rules mandate uniform margin requirements for all equity trades, including intraday trading, to reduce excessive risk-taking. Traders must maintain a minimum initial margin based on stock volatility, with brokers reporting peak margin utilization throughout the trading day. Penalties are imposed for margin shortfalls, effectively capping leverage and reducing it from previous levels. 

Kamath in his post added that higher Securities Transaction Tax (STT) on intraday equity and futures has only made it more hurting. 

"Apart from leverage, the fact that securities Transaction Tax (STT) is higher for intraday equity and futures compared to options has also hurt the volumes. The hope is STT on intraday equity and futures will reduce some day," he wrote. 

"Intraday equity trading turnover is important because it significantly reduces the impact cost for those making equity delivery trades," he said.

Kamath's post resonated with many members of the trading community. "Why is there STT when there is already STCG and LTCG in place?," wrote a user while another said he switched to F&O-intraday from equity because of higher charges.

In a recent BSE interaction, Finance Minister Nirmala Sitharaman was questioned by a broker on the hoard of taxes his community has to bear. The broker said while investors were putting their money at risk, the government reaped the rewards by imposing a "heavy tax burden". Enumerating the plethora of taxes imposed on every transaction, including STT, he said the government made more money than brokers.

"I am taking a whole lot of risk, and the government of India is taking away all of the profit. You are my sleeping partner, and I am the working partner with no income," he said to which the FM remarked: "A sleeping partner cannot answer sitting here."