President gives assent to Stamp Act amendments

The budget proposal to streamline the collection of stamp duty levied on securities has become operational with President Ram Nath Kovind on Thursday giving his assent to the amendments to the Indian Stamp Act, 1899, introduced as part of the Finance Act, 2019.

With the amendments, a new streamlined system of stamp duty payment will be put in place. Stamp duties would be levied on one instrument relating to one transaction and get collected at one place through the stock exchanges (through the stock exchanges or clearing corporations authorised by the stock exchange or by the depositories).

The duty so collected will be shared with the states on the basis of domicile of the paying client.

The changes are part of reforms proposed in the last Union budget with respect to the stamp duty collection on financial securities transactions in consultation with states.

At present, brokerage houses collect stamp duty and pay it to state, making the process cumbersome. Moreover, the differential rates in states also add to the confusion and lead to jurisdictional disputes and multiple incidences of duty, thereby raising the transaction costs in the securities market and hurting capital formation. This also opens scope for rate shopping and evasion of duty, a government statement said.

Under the new system, cost of collection would be minimised and revenue productivity enhanced. Adoption of the centralised collection mechanism is expected to bring in not only more revenue but greater stability to the revenue collection by the states, it added.

The new system will help develop equity markets and equity culture across the country, ushering in balanced regional development.

--IANS

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