All you need to know about the uniform stamp duty on share transfers starting from January 2020

Stamp duty will also be applicable to off-market transactions, which were previously not subject to the same.

The Finance Ministry on December 10, notified that transfer of shares from one account to another, via a delivery based transaction or off-market transfer would attract a stamp duty starting January 9. The stamp duty rates will be uniform across the country and will also apply to off-market transactions, which were previously not subject to stamp duty.

What prompted the change?

Previously different state governments collected stamp duty at varying rates. As an example, for intraday/ derivative trades, Andhra Pradesh at the present charges 0.005% or Rs 50 per contract- whichever is higher, while the charges in Uttar Pradesh are 0.002% per contract or Rs 1000.

Similarly, for delivery based trades, Maharashtra collects 0.01% stamp duty while Daman charges only 0.005%. Due to the varying rates, many brokers specifically choose a place of incorporation in states and UTs where the stamp duty is lower like Daman & Diu, Goa and Tamil Nadu. With the introduction of a uniform charge, any such unfair advantage will be lost.

Related: What documents to keep ready while filing your ITR? 

What are the new charges?

For equity delivery trades, stamp duty will be 0.015% or Rs 1500 per crore. Unlike the present rule where the stamp duty is charged both on buying and selling, the new rates will be charged only on the buy-side.

For intraday equity and commodity trades, the stamp duty will be 0.003% or Rs 300 per crore.

For future-based trades on both equity and commodities, the stamp duty will be 0.002% or Rs 200 per crore.

Stamp duty on options trading of equity and commodities will be the same as intraday trades at 0.003% or Rs 300 per crore.

Stamp duty on currency trades will be 0.0001% or Rs 10 per crore.

Presently, stamp duty is charged basis the contract note and traded volume. The stamp duty is collected by the clients’ brokers and then forwarded to the respective state governments. 

From January 9, the stock exchanges will collect the stamp duty for equity and commodity trades, while the depository will collect the charges for off-market transfers. 

All the proceeds will go to the Central Government, which will then be divided among the states and union territories.

Take a look at the different stamp duties across Indian states to explore all the available options.