- Zerodha co-founder Nikhil Kamath urges taxing traders on income, not transaction costs
- Kamath defends speculators, calling them vital for efficient price discovery in markets
- He highlights retail losses mainly stem from taxes, fees, and transaction impact costs
Zerodha co-founder Nikhil Kamath has called for taxes on traders to apply to income rather than the cost of transacting, arguing that a significant part of retail losses in the futures and options (F&O) market comes from charges and levies rather than trading decisions.
Speaking at the NDTV World Summit 2026, Kamath pushed back against the view that speculators are bad for markets. Removing them, he said, would make price discovery “so inefficient” that it “would put us back 10 years.”
“The speculators provide a very valuable resource, which is needed for our stock market to thrive,” he said, adding that he did not think they should be “reprimanded or looked at in the manner that they are.”
Where The Losses Go
Addressing the commonly cited figures on how many retail traders lose money, Kamath said everyone attaches a different number, “80, 90,” but few break down where the money is being lost.
A significant chunk, possibly the majority, he said, goes to securities transaction tax, transaction charges, SEBI fees, cesses and impact cost. Using an options contract as an example, he said a trade meant to execute at 100 often gets matched at 101, 102 or 103, with money lost on every trade.
“Everything I want changed I think has to be changed in favour of retail investors,” he said, so they can “actually be profitable,” rather than raising taxes further.
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Level Playing Field
Kamath said the category that deserves closer scrutiny is high-frequency traders and hedge funds, both Indian and foreign.
Asked whether co-location, which lets some participants execute faster than retail clients, should exist, he said, “in my view, probably not.” He also backed interspersing algorithmic orders with retail orders so that algos do not get an edge.
“Indian retail should be given a level playing field across every realm of strategy that they're trying to execute,” he said.
Bigger Markets, Bigger Economy
Kamath linked the issue to India's long-term growth, noting that equity investor penetration in the country is below 5%. He said India needs “hundreds” of brokers like Zerodha and Groww, and more traders, speculators and investors, because large stock markets where companies can easily list and raise capital have been “synonymous with developed economies.”
Taxation should be tweaked so it does not eat into that goal, he said, which is “a robust, really large equity market in India where it is very easy to raise the large amount of risk capital required.”
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