The latest changes made by the Finance Ministry clearly define the increase in stamp duty rates to be levied on each type of trading or transactions. Below are the changes in the rate of stamp duty effective from January’20
  • 0.015% or INR 1500 per Cr on Buyer Side, for delivery trade
  • 0.03% or INR 300 per Cr on intraday equity trade.
  • 0.02% or INR 200 per Cr on future equity and commodities trading options.
Earlier in the context of transferring stock, no duties were levied on stocks that were not listed, though the striking percentages of stamp duty were collected from different states. However, the Ministry of Finance has redirected the stock exchange board to collect duties on listed stocks and a standardized rate depository on off-market stocks. These are to be presented before the central government and to be divided further to different states by union.

Effect on State Revenue and Traders

Every change in norms have both, positive as well as negative impact on the market. Stamp duty is considered as the source of revenue for the state government. Standardizing the rate on stamp duty can help in bringing uniformity among the rates imposed by different states, thus making the accountability of revenue generated easier.

States or UTs like Tamil Nadu, Goa, Daman & Diu, will have a positive impact from the new reform of stamp duty but few states like Andhra Pradesh, Uttar Pradesh, Maharashtra whose rates were lower than the new structure will have a negative impact from this change.

From the trader’s point of view, the effect of an increase in stamp duty will have a different impact depending upon the amount of transaction and the state from which the transaction has been done. For example, the bigger traders, specifically trading from the states like Maharashtra, UP or Andhra Pradesh will have to pay more as stamp duty than before.

Since the larger traders play in bigger volumes or large amounts, non-capping will now make them pay stamp duty on the whole transaction, which was earlier limited to some percentage or a few hundred per crore, whichever is higher. On the other hand, small traders with the relatively small transaction amount will have the least positive as well as negative impact depending upon the states from which they are commencing their transactions.

To Conclude

It indicates both the positive and negative movement in the curve of revenue to be generated by the state government from stamp duty. The impact will be on either side for the trader as well.

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DISCLAIMER

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.



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