INSUBCONTINENT EXCLUSIVE:
The government has simplified the stamp duty collection process for listed securities, making it centralised at a unified rate.
So, from the
next financial year, stock exchanges will collect the stamp duty for trading stocks at a unified rate and deposit the proceeds with the
central government, which in turn will divide it among the states.
At present, brokers collect stamp duty at rates fixed by the state where
the trade takes place and deposit it with the local government.
“The budget has proposed that there will be a single collection centre for
stamp duty with the introduction of a unified slab,” said Satish Menon, executive director at Geojit Financial Services
“There are so many challenges currently in collecting and paying stamp duty as different stares have different regulations in regards to
stamp duty.”
For transactions that don’t happen on the stock exchange platform, depositories have been asked to collect stamp duties
This provision will cover offmarket transactions that are not captured by stock exchanges.
The move, proposed in the interim budget on
Friday, will also end the tax advantage that brokerages and investors have been getting for routing their trade through some states with
cheaper stamp duty.
Several brokerages have been choosing their place of incorporation in destinations like Daman and Goa where the stamp
For instance, Maharashtra collects a stamp duty of 0.01% for delivery-based trades which is double as compared to Daman’s 0.005% slab
Bringing in uniform rate will put an end to such practices.
While the government has not yet announced the stamp duty rate applicable,
brokers are expecting Maharashtra stamp duty slabs to be used as the benchmark.
In such a scenario, investors from states such as Tamil Nadu
and Rajasthan will see a fall in their stamp duty outgo, while investors from Haryana, Telangana, Uttar Pradesh, Odisha and Assam will end
up paying higher stamp duties
The tax outgo will remain unchanged for states such as Gujarat, West Bengal and Kerala.
Experts said the move will also ease the compliance
“The move will save brokers from a lot of procedural hassles as stock exchanges and depositories will be collecting the stamp duty and
transferring it to central government just like the Securities Transaction Tax (STT),” said Shalibhadra Shah, chief financial officer at
Motilal Oswal Financial Services.
