Government to levy stamp duty tax of 0.0001% on transfer of equity instruments

From January 2020, the cost of investment in direct stocks, mutual funds, ULIPs and NPS will go up marginally for investors.

Government has announced the new stamp duty rates in which it has imposed stamp duty of 0.0001% on transfer and re-issue of equity and equity related instruments. For debt instruments, the government will levy stamp duty tax of 0.015% on delivery transactions and 0.003% on intraday and option transactions.

In case of equity IPOs and fresh issuance of debt papers, the government has imposed stamp duty tax of 0.005%.

The stamp duty tax on futures both equity & commodity and currency & interest rate derivatives would be 0.002% and 0.0001, respectively. There will be no stamp duty tax on transaction of government securities.

Finally, the government would levy stamp duty of 0.00001% on transaction of repo on corporate bonds.

These rates will be common for all investors irrespective of their physical location. However, the government has clarified that stock exchanges will have to track origin of investors to distribute stamp duty among states.

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. Clearly, the impact would be more on funds with high turnover ratio.

Also, industry experts estimate that mutual fund industry executes transaction of Rs.5 lakh crore each month in equity and debt markets.

New Stamp duty rates with effect from January 9, 2020