Centre mulls revamping Stamp Duty Act

The Government is looking to revamp the Stamp Duty Act to bring about a uniformity in the rates for the taxation of financial securities on a destination-based principle.

According to a report in The Economic Times, one key idea being discussed would be to cut the taxes by the exchange, and distribute it among states.

The Department of Economic Affairs in the Finance Ministry has already held one round of discussion with states where it made a presentation on the proposed regime.

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According to the finance secretary Hasmukh Adhia, the revamps would work out the collection of duty, the need for a uniform rate and a division to be set on the basis of destination

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The Stamp Duty Act states that the stamp duty meant to be applied on the transaction of financial securities were to be decided by the Central government. In practice however, the states decides the rates of their respective duties, based on the total contract value. This raises the transaction cost for investors.

Also, if a trader residing in Gujarat, but trades on the BSE, would end up paying his duty to the Maharashtra government, where the BSE is housed.

The act hopes to change that  so that the tax is deducted from the purchaser when he purchases shares and then it will be passed on to the state where he is based.

Maharashtra brings about a 0.01% stamp duty on the transaction of financial securities.

 

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