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Nikhil Kamath has proposed taxing traders on their trading income rather than on the cost of executing transactions. It is a policy argument, not a change in Indian tax law: the sources reviewed do not show that the proposal was adopted or formally considered. His remarks focus on the burden transaction costs can place on retail futures-and-options (F&O) traders, but they do not establish how much of retail losses those costs cause.
What is Kamath proposing?
At the NDTV World Summit 2026, Zerodha co-founder Nikhil Kamath argued that taxes on traders should apply to income rather than the cost of transacting. NDTV Profit reported his remarks on October 22, 2026. His proposal is an opinion about how the system should work; it does not itself alter tax obligations.
Kamath’s argument connects two issues: the cost of placing and executing trades, and whether retail traders compete on fair terms with faster institutional participants. He said speculators provide a valuable resource for markets and called for a level playing field for retail investors. Those are his stated views, not independently established findings about market effects.
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“The speculators provide a very valuable resource, which is needed for our stock market to thrive.”
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— Nikhil Kamath, as quoted by NDTV Profit on October 22, 2026
How does his proposal differ from the current framework?
The distinction is between what a tax or charge is calculated on and what income a trader ultimately earns. Kamath’s proposed framing would put trading income at the center; the current framework includes taxes and charges linked to transactions as well as income-tax treatment of trading results.
| Question | Current context in the cited sources | What Kamath’s proposal raises |
|---|---|---|
| What is taxed or charged? | Specified securities derivatives transactions attract STT at rates listed by the Income Tax Department; other costs may also apply. | Whether the tax burden should be based on trading income rather than transaction costs. |
| How are F&O results treated? | The Income Tax Department’s section 43 text excludes qualifying exchange-traded derivatives from the definition of speculative transactions, subject to statutory conditions. Zerodha describes recognized-exchange F&O profits and losses as business profits and losses. | How an income-based approach would treat profits, losses, and deductible expenses is not specified in the reported proposal. |
| What happens to transaction charges? | STT is one listed charge; the cited rates are not a complete account of all costs. | The proposal does not specify whether STT or other charges would be removed, changed, or retained alongside income-based taxation. |
| Would retail participation change? | The cited sources do not establish an effect. | Kamath argues for a level playing field, but the proposal’s effects are not quantified. |
What STT rates apply to derivatives from April 1, 2026?
The Income Tax Department’s Budget 2026 FAQ lists revised securities-derivatives STT rates for transactions entered into on or after April 1, 2026. These are STT rates for the specified transaction bases, not the total cost of trading.
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- Sale of an option: 0.15% of the option premium.
- Sale of an exercised option: 0.15% of its intrinsic price.
- Sale of a future: 0.05% of the traded price.
The rates do not include every possible brokerage charge, exchange charge, tax, fee, or execution cost. The total amount associated with a trade therefore cannot be calculated from these STT percentages alone. See the Income Tax Department’s Budget 2026 FAQ for the official rate guidance.
How are F&O profits and losses treated under the cited rules?
Section 43 of the Income Tax Act says eligible derivatives transactions carried out on a recognized stock exchange are not deemed speculative transactions when the statutory conditions are met. The exclusion is conditional; it should not be read as covering every derivative transaction regardless of how or where it was conducted. Consult the Income Tax Department’s section 43 text alongside the legislation applicable to the relevant tax year.
Zerodha’s educational explainer characterizes profits and losses from recognized-exchange F&O trading as business profits and losses. That is broker guidance, not an official ruling or individual tax advice. A trader’s filing position can depend on the applicable year’s law and personal circumstances; the reported proposal does not replace current filing requirements.
What does Kamath say transaction costs do to retail traders?
Kamath argues that STT, transaction charges, SEBI fees or cesses, and impact cost contribute heavily to retail losses. The sources reviewed do not independently quantify what share of retail F&O losses those costs account for, so this should be understood as his claim rather than a measured estimate.
NDTV Profit reports that Kamath referred to widely cited retail-loss figures as “80, 90,” but the report does not provide an independently verified study substantiating either number. It also attributes to him a claim that equity-investor penetration is below 5%, without defining the measure or providing an original data source. Neither statement should be treated as a verified national statistic on the evidence cited here.
Kamath illustrated execution costs with an intended options execution at 100 that matches at 101, 102, or 103. This is his example of how execution can differ from the intended price, not a measured estimate of typical slippage across the market.
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Has the proposal changed the rules?
The available reports do not establish that the proposal was adopted, formally considered, or received an official response after the summit. Until an official change is announced, traders should distinguish Kamath’s policy argument from the rules and rates currently applicable to their transactions and tax year.
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What does “impact cost” mean in trading?
It generally describes the price effect associated with executing an order, especially when the execution price differs from the price available or expected before the order is placed. Kamath’s example of an intended execution at 100 filling at 101, 102, or 103 illustrates his point; it is not a market-wide measurement.
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Does the section 43 exclusion mean F&O trading is tax-free?
No. The cited section concerns whether eligible exchange-traded derivatives are treated as speculative transactions under that provision; it does not say that trading profits are exempt from income tax. The applicable treatment depends on the law for the relevant tax year and the trader’s circumstances.
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Are the Budget 2026 STT percentages the only costs on an F&O trade?
No. The Income Tax Department’s listed percentages cover STT on specified transaction bases, not the complete cost of a trade. Brokerage, exchange charges, other taxes or fees, and execution costs may also be relevant.
Where can I check whether Kamath’s proposal has been adopted?
Look for an official government or tax-authority announcement or legislation, rather than inferring a rule change from coverage of the summit remarks. The cited reporting and official Budget FAQ do not establish adoption.
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