Effective from 9 January 2020, be prepared to shell out more on transferring shares as the cost is set to rise. All shares transactions, including off-market deals, will attract stamp duty. The Ministry of Finance on Tuesday issued a notification which says there will be stamp duty levied on all such transactions at the same rate across the country.
The off-market transactions were not attracting stamp duty until now, but the new changes have got them eligible for the same. Some states were already collecting stamp duty at their rates, and now, the latest notification from the Ministry of Finance has fixed a standard rate across the country for trading listed securities.
Stock exchanges are directed to collect stamp duty on trading listed commodities and stocks effective from 9 January 2020 while depositories are in-charge to collect the same for any off-market transaction at the rate specified by the government. The depositories and exchanges will deposit the proceeds of the stamp duty before the union government who will then distribute it to the respective states.
The stamp duty for trading equities will be levied only on the buy-side at the rate of 0.015% or Rs 1,500 per crore. As of now, stamp duty is collected on both sell and buy trades. All intra-day commodity and equity trades are subject to stamp duty at the rate of 0.003% or Rs 300 per crore.
The stamp duty for intra-day equity and options trades would be 0.002% or Rs 200 per crore, and it is 0.0001% or Rs 10 per crore for currency trades. Stamp duty is collected as per contract note and is based on the volume of the trade. As of now, brokers are responsible for collecting stamp duty from clients and deposit it with state governments.
The traders based out of Goa, Tamilnadu and Daman & Diu will benefit from the implementation of the uniform stamp duty rate. The states of Telangana, Haryana, Odisha, Uttar Pradesh, and Andhra Pradesh had a capping on the stamp duty per pay, and now this uniform rate will affect the traders based out of these states.
For any clarifications/feedback on the topic, please contact the writer at email@example.com
Engineer by qualification, financial writer by choice. I am always open to learning new things.