Stamp Duty On Mutual Funds - Major Changes

Stamp Duty On Mutual Funds To Apply From 1 July - THINGS YOU NEED TO KNOW


* The stamp duty will apply to all mutual funds, debt as well as equity, including lump-sum, SIPs, STPs and dividend reinvestment.

* If you switch from one scheme to another, you will have to pay the stamp duty. It will also be applicable if there are dividend reinvestment transactions.

* Transfer of units from one Demat account to another, including market or off-market transfers, will also attract stamp duty.

* The duty will not be applicable to the redemption of units.
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* Stock exchanges or clearing agencies would collect duty on securities transactions (sale and purchase of shares) and deposit it with the Centre. The depositories would collect stamp duties for transactions that don’t happen on the stock exchange platform.

* The rate of duty has been proposed at 0.0001% for transfer and reissue of debentures while rates vary from 0.0005% to 0.015% for other financial securities transactions rated to shares, or derivative products.

* So if you buy mutual fund units, you will pay stamp duty at a rate of 0.005% and in case of transfer of MF units such as between two Demat accounts the charge will be 0.015%.

* The stamp duty will be imposed for dividend reinvestment on the dividend amount after deducting the tax at source (TDS). If there is a transaction charge of Rs 100 on a unit purchase of Rs 1 lakh, then the stamp duty of 0.005% will be applicable on Rs 1 lakh and not Rs 1,00,100.

* The impact of the stamp duty will be higher for investors with short-term investment holding periods of 90 days or less. Banks and corporates who invest in liquid and overnight schemes of mutual funds come under this category.

Check previous post for detailed information

Remember 1 july is Celebrated as CA DAY 

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