Applicability of Stamp Duty as per Finance Act Notification
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As per Finance Act notification, there has been a change in the Stamp Duty Act with effect from July 01, 2020. Accordingly, the impact of the same will be applicable to all transactions done in various Segments with an effective date. This has been done by the government to implement uniform stamp duty on the transfer of securities and capital market instruments.
The following table shows the difference in existing & new practice under various segments:
| Segment | Existing | Effective July 01, 2020 | New Rate of Stamp Duty |
|---|---|---|---|
| Direct Equity | – Applicable on Turnover – Rate varies at State level – Collection by Broker & deposit to respective State Government | – Applicable to Buyer (Buy Side only) – Common Rate across India – Collection by Broker & deposit to Exchange Clearing Corporation centrally. – Clearing Corporation will deposit to Central/State Government | Equity (Delivery): 0.015% Equity (Non- Delivery): 0.003% Debentures: 0.0001% Govt. Securities: 0% |
| Mutual Fund | Stamp duty is not applicable on Mutual Fund | – Applicable on all Subscription (ie PIP/SIP/SWI/STP-IN) transactions irrespective of the mode of transaction i.e., (Demat or Physical) – Collection by AMC/RTA – The investment amount will be derived after deducting Stamp duty from the Purchase amount. Eg: (Refer below Table) | All Types of Mutual Fund: 0.005% |
| Off Market | Stamp duty is not applicable on Off Market | – Applicable on all Off Market transactions (all types of scrips) – Collection by Depository from DP – Depository pays to Central/ State Government – DP will collect from the client through monthly billing | Mutual Funds & Equity Scrips :0.015% Debentures: 0.0001% Govt. Securities: 0% |
Example for Mutual Fund Transaction:
| Purchase Transaction Amount | Stamp Duty Rate | Stamp duty amount | Investment amount considered for Unit allotment | NAV | Allotted Units |
| Rs. 1 lakh | 0.005% | Rs. 5/- | Rs. 99,995/- | Rs. 10/- | 9999.500 |
Please note that with the effective date, the investment amount for unit allotment for mutual fund transactions will be considered after the deduction of the stamp duty.
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Hi, I’m Managing Director at Gurpreet Saluja Financial Services where I help my investors to invest in mutual funds and achieve their financial goals. I’m also a Value Investor and here I write about Personal Finance & Investing.