AMFI has sought clarification from the government on stamp duty tax to be levied on financial products including mutual funds.
Earlier, in interim budget 2019, the Union Finance Ministry has announced that the government would levy stamp duty on financial securities transactions, which includes financial instruments like direct stocks and mutual funds.
An AMFI board member requesting anonymity told Cafemutual that AMFI has sought clarification on who will bear the stamp duty tax on such transactions. “Currently, TER does not include stamp duty tax. Hence, we have requested finance ministry and SEBI to make necessary changes to the TER structure. Ideally, investors should bear stamp duty tax on mutual funds.”
Since mutual funds deal with shares, every time a fund manager executes transaction, the fund has to pay stamp duty along with securities transaction tax. “Currently, the mutual funds fund industry executes transaction of Rs.5 lakh crore each month in equity and debt markets. Hence, the impact of stamp duty would be large. Also, the impact would be more on funds with high turnover ratio,” he said.
He further said that while government is yet to announce the rate at which stamp duty will be levied on demat transactions, it is understood that it would be 0.005%. This would be implemented from April 1, 2019, he said.
Earlier, the government had waived off stamp duty in transaction of securities in demat form. However, the government has proposed to re-introduce this duty. Also, stock exchanges will have to track origin of investors to distribute stamp duty among states.
