Union Budget 2026 (India): Key Numbers, Clear Examples, and Why F&O Traders Are Angry

On 1 February 2026, Finance Minister Nirmala Sitharaman presented the Union Budget 2026–27, outlining how the government plans to raise and spend money for the next year.

Let’s break this down in simple words, with real figures and relatable examples, especially focusing on the economy, the stock market — and the controversial STT hike on F&O trading.

🧾 Budget at a Glance: Key Numbers You Should Know

 

So What Do These Numbers Really Mean?

Think of the government like a household:

• ₹53.5 lakh crore is the total money it plans to spend next year.

• ₹12.2 lakh crore will go only into building assets — new roads, power plants, railways — almost as big as the GDP of some countries.

• Fiscal deficit at 4.3% means the government still needs to borrow, but less than before, showing discipline.

 

💡 Real-Life Example: Capex with Numbers

Before Budget 2026:
➡ Gov had planned ₹11 lakh crore capex for FY26.
After Budget 2026:
➡ Capex boosted to ₹12.2 lakh crore (around 9–11% growth).

✅ Example: If a city spends ₹1 lakh on infrastructure last year, this year it plans to spend ₹1.09–1.11 lakh — meaning more roads, power projects, and jobs.

📉 STT on F&O: What Changed (Numbers Explained)

This is the part traders really care about.

Real Money Example (Trader Perspective)

Imagine you enter a Bank Nifty futures trade worth ₹10 lakh:

• Earlier STT cost: 0.02% → ₹200

• New STT cost: 0.05% → ₹500

📌 That’s an extra ₹300 lost to tax alone per trade, before brokerage, exchange fees, and GST.

If you make 10 similar trades in a week, that’s ₹3,000 extra cost just from STT — and that’s before calculating profits or losses.

This is why active traders feel squeezed — costs have jumped even though their skill hasn’t changed.

 

🧠 Market Reaction With Numbers

On Budget day:

• Nifty50 fell over 2%

• Sensex dropped ~1,300 points intraday

• Markets wiped out roughly ₹9–10 lakh crore of investor wealth at one point, driven in part by fear over STT changes and lower liquidity.

Why this happened

When STT rises:

• Trading becomes more expensive

• Short-term traders cut volumes

• Overall market activity declines → liquidity dries up → indices move down

 

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Fiscal Deficit & Debt — Simplified

The government aims to control how much it borrows:

• Fiscal deficit reduced from ~4.4% to 4.3% of GDP.

• Debt-to-GDP ratio is targeted at ~55.6% (down from ~56.1%).

Simple comparison

Imagine your annual income is ₹1 crore:

• Last year, you spent ₹1.044 crore → you borrowed ₹44 lakh.

• This year, you spend ₹1.043 crore → you borrow ₹43 lakh.

Small change, but signals fiscal discipline.

🏗 How Capex Helps (With Example)

Capex = long-term investment.

If the government spends:

• ₹2 lakh crore on highways

• ₹1 lakh crore on power plants

• ₹1 lakh crore on logistics

That means:

• More jobs

• Faster goods movement

• Lower transportation costs for businesses

Investors in sectors like infra, roads, and capital goods may benefit.

🧩 Who Gains & Who Loses (Now With Figures)

📈 Likely Winners

• Infrastructure companies (benefit from ₹12.2 lakh crore capex)

• Long-term investors (policy continuity)

• Corporate India (stable macro conditions)

⚠️ Neutral

• Equity delivery investors (unchanged direct tax slabs)

• Mutual funds (macro stability)

📉 Clear Losers

• F&O traders (STT hikes increase costs)

• High-frequency traders (breakeven costs rise significantly)

• Brokers focusing on derivatives volume (impact on revenue)

 

🔚 Clear Takeaway in Numbers

Bottom line:
This budget prioritises stable, long-term growth — and that’s good for the economy.
But for active traders and F&O participants, the higher taxes mean higher costs and lower profitability.

🔍 FAQs: Union Budget, STT & F&O Trading (Explained with Numbers)

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1️⃣ What is the total size of the Union Budget 2026–27?

The total expenditure in Union Budget 2026–27 is ₹53.5 lakh crore.

Example:
If India were a household earning ₹100, the government plans to spend about ₹104–₹105, funding the extra amount through borrowing.

2️⃣ How much is the government spending on infrastructure (Capex)?

The government has allocated ₹12.2 lakh crore as capital expenditure (capex) — the highest ever.

Comparison:

• FY25 capex: ~₹11 lakh crore

• FY26 capex: ₹12.2 lakh crore

That’s roughly a 9–11% increase, focused on roads, railways, power, and logistics.

3️⃣ Why does high capex matter for the economy?

Capex creates long-term assets, jobs, and productivity.

Example:
Building highways today reduces transport costs for businesses tomorrow.
This helps:

• Manufacturing

• Logistics

• Employment

• Corporate earnings (over time)

That’s why long-term investors usually like capex-heavy budgets.

4️⃣ What is STT in F&O trading?

STT (Securities Transaction Tax) is a tax charged on every F&O transaction, regardless of profit or loss.

You pay STT:

• When you trade futures

• When you trade options

• Even if the trade ends in a loss

It is deducted automatically by the broker.

5️⃣ Has STT increased in the latest Union Budget?

Yes. STT on F&O trades has been increased.

Here’s the exact change:

 

6️⃣ How much extra does a trader actually pay due to STT hike?

Let’s take a real example:

Bank Nifty futures trade value: ₹10 lakh

• Earlier STT (0.02%) → ₹200

• New STT (0.05%) → ₹500

👉 Extra cost = ₹300 per trade

If you take 10 such trades in a week, that’s ₹3,000 extra cost, even before brokerage, GST, or exchange charges.

7️⃣ Does STT apply even if I make a loss?

Yes.
STT is charged per transaction, not on profits.

Example:
You lose ₹2,000 on an options trade.
You still pay:

• STT

• Brokerage

• GST

This is why traders consider STT one of the most painful costs.

8️⃣ Who is most affected by the STT hike?

The biggest impact is on:

• Intraday F&O traders

• Option sellers with frequent adjustments

• Scalpers & high-frequency traders

• Small retail traders with limited capital

Long-term equity investors are largely unaffected.

9️⃣ Can STT be claimed as a tax deduction?

No.
STT cannot be claimed as a business expense or deducted from income.

It is a permanent cost, unlike brokerage or infrastructure expenses.

🔟 Will higher STT reduce F&O trading volumes?

Most likely, yes.

Higher costs lead to:

• Lower trading frequency

• Reduced liquidity

• Exit of marginal traders

Ironically, lower liquidity can increase volatility, not reduce speculation.

1️⃣1️⃣ Why didn’t the stock market react positively to the budget?

Because:

• No major tax relief was announced

• Trading costs increased via STT

• Liquidity concerns rose

On budget day:

• Nifty fell over 2%

• Sensex dropped ~1,300 points intraday

Markets saw the budget as macro-stable but trader-unfriendly.

1️⃣2️⃣ Is this budget better for investors than traders?

Yes.

This budget:

• Rewards long-term capital

• Encourages patience

• Penalises frequent trading

Summary:

• Investors → relatively safe

• Traders → higher pressure

 

1️⃣3️⃣ Should traders stop trading F&O after this budget?

Not necessarily, but traders must:

• Reduce over-trading

• Recalculate breakeven after costs

• Focus more on risk-reward efficiency

In this environment, cost control itself becomes a strategy.

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1️⃣4️⃣ What is the biggest takeaway from this budget?

👉 The government prioritised economic stability over market participation.

• Good for the economy

• Acceptable for investors

• Painful for active traders

This is a long-term growth budget, but a short-term trader squeeze.

Conclusion: A Stable Budget, But at the Cost of Market Participation

The Union Budget 2026–27 makes one thing very clear: economic stability has been prioritised over market participation.

From a macroeconomic lens, the numbers look disciplined — higher capital expenditure, controlled fiscal deficit, and no reckless spending. These are responsible decisions for a growing economy and long-term investors will likely appreciate this approach.

However, the same cannot be said for active market participants.

The sharp increase in STT on F&O trades reflects a policy mindset that treats trading activity as an easy revenue source rather than a critical part of market liquidity. By taxing transactions instead of profits, the government has effectively raised the cost of participation, not speculation. Disciplined traders, who already operate on thin margins and tight risk controls, end up paying more even when they are wrong.

This approach risks creating an uneven market:

• Long-term capital is rewarded

• Large institutions absorb the costs

• Small and mid-sized traders are quietly pushed out

Markets thrive on liquidity, participation, and fair cost structures. Increasing friction through higher transaction taxes may bring short-term revenue, but it can also reduce volumes, discourage transparency, and push activity toward less regulated avenues.

In that sense, this budget feels macro-responsible but micro-indifferent — supportive of growth, yet dismissive of the trader ecosystem that keeps markets efficient on a daily basis.

A balanced policy would have aimed to encourage participation while regulating excess, not penalise activity across the board.

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Disclaimer

This article is for educational and informational purposes only.
It does not constitute financial, investment, tax, or trading advice.

Market investments and trading — especially in derivatives — involve significant risk and may not be suitable for all investors. Readers are advised to consult with a registered financial advisor or tax professional before making any financial decisions.

The views expressed in this article are personal interpretations based on publicly available information and are not intended to influence or recommend any specific investment strategy.