In a gazette notification issued recently, the government has reintroduced stamp duty tax on financial securities transaction.
With this, investment in direct stocks, mutual funds, ULIPs and NPS will become a bit more expensive for investors from January 9, 2020.
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. Industry experts estimate that mutual fund industry executes transaction of Rs.5 lakh crore each month in equity and debt markets. Clearly, the impact of stamp duty would be large.
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% in Maharastra.
Prior to this, the government had waived off stamp duty on transaction of securities in demat form. Also, each state used to impose and collect stamp duty at its own rate. However, the government has clarified that there will be a common rate for all states.
The government also said that stock exchanges will have to track origin of investors to distribute stamp duty among states.
