Share traders in Tamil Nadu are set to benefit from the reduction of stamp duty on certain transactions, which came into effect from July 1.
The Government of India had amended the Indian Stamp Act 1899 (revised Act), through Finance Act, 2019, and the relevant Stamp Rules, 2019, were notified on December 10, 2019, with the aim of bringing uniformity in the stamp duty levied on securities transactions across States.
In Tamil Nadu, for intra-day trading (which involves buying and selling stocks on the same trading day) the stamp duty has now come down to 0.003% from 0.006% , while in case of delivery of shares the stamp duty is increased to 0.015% from 0.006%.
“Traders in Tamil Nadu would benefit the most from the changes in stamp duty rates. Earlier, both buyer and seller of shares had to pay ₹1,200 per crore as stamp duty. Under the new rates, only buyer of shares has to pay between ₹200 to ₹300,” said Nithin Kamath, founder and CEO of Zerodha, a broking firm.
A state government official said that among security transactions the intra-day trades brought in more revenues in terms of stamp duty.
However, he said the move would result in more compliance and there won’t be any loss of revenue for the State.
Jawahar Vadivelu, chairman of broking firm Navia Markets Limited, said the new structure had not only rationalised stamp duty rates, but also made it uniform across States.
“Stamp duties on securities transactions shall now be centrally administered, collected and distributed to the respective States. The new system is simpler and saves market participants from having to register separately with each State where their clients are located. It. therefore. ensures fairness, simplicity and equity. Rationalisation of transaction costs would also result in higher volumes over time, thereby ensuring better price discovery,” he said