Stamp Duty

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Stamp duty is a government tax in India on trading in stocks, currency derivatives and commodities. It is collected by the stockbroker for issuing stamped contract notes at the end of the day.
Stamp Duty definition

Stamp duty is charged on trading in stocks, currency derivatives and commodities in India. The stamp duty is a tax that is levied while issuing, selling or transferring the stocks, debentures, currency derivatives, and commodity instruments. The tax is collected for providing a stamped contract note to the traders at the end of the day.

Stamp duties are charges by the state government. Broker takes the stamp duty from you and pay to the state where you live. The rate of stamp duty is different for different state.

Note: Amendments were made in the Indian Stamp Act, 1899 in the Finance Bill, 2019 by introducing uniform stamp duty for the stock market investor's across India. But it has been postpone till 1st July 2020.

Answered on

FAQ's

  1. 1. How Stamp Duty is collected?

    Any issuance, transfer or sale of securities (through exchange or off-market) attracts stamp duty in India. It is collected by the Stock Exchanges, Depositories or Clearing Corporations.

    The clearing corporation, stock exchanges, and depositories collect the stamp duty and transfer it to the Central Government within three weeks of each month.

    Note: The stamp duty from buyers or allottees of securities will be collected by the authorities within the states where buyers reside.

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  2. 2. Who pays the stamp duty for stock transactions?

    Here is the table mentioning the stamp duty charges paid by the buyer or seller:

    Transaction

    Who will pay stamp duty?

    Sale of securities on the stock exchange

    Buyer

    Sale of Securities through offline markets

    Seller

    Transfer of security

    Transferor

    Issue of security

    Issuer

    Other Cases- making, drawing, or executing instruments

    Concerned Trader

    Note: Previously, stamp duty was paid by both the buyers and sellers of the stock transactions. Now, only investors buying stocks have to pay stamp duty. The seller of the securities will not pay any stamp duty.

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  3. 3. Who collects the stamp duty for stock transactions?

    As per the new amendments applicable from Jan 09, 2020, the following entities will collect the stamp duty on certain transactions:

    Transaction Type

    Authority collecting Stamp Duty

    Sale of securities (through a stock exchange)

    Stock exchanges

    Transfer of securities (through a depository)

    Depository

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  4. 4. Which types of stocks transactions attract stamp duty?

    Here are the two transactions which attract stamp duty for stocks:

    • Sale or transfer of Stocks
    • Issuance of Stocks

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  5. 5. Does government securities attract stamp duty?

    No, government securities are exempted from stamp duty. Buying and selling of Government Securities will not attract any stamp duty charges.

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