Stamp Duty on Securities

Earlier, the Issue and Transfer of Securities in Demat were not subject to Stamp duty.

However, after the amendments through the Finance Act, 2019, the issue and transfer of securities in demat chargeable to stamp duty. The rate of Stamp Duty on the transfer of shares is universal and the same across the country i.e. .015% of the market value of shares. Thus stamp duty is to be collected on market value or consideration involved in the transfer of shares, as mentioned in the transfer instruments. As the Nil consideration involved in the Gift of securities, there is no stamp duty implication in the Gift transaction. ?

Further, ?in terms of Section 4 (3) of the Indian Stamp Act, in case of any issue of securities, where the duty has been paid on the principal instrument chargeable under Section 9A i.e. instrument chargeable with duty for transactions in stock exchanges and depositories, no stamp duty is required to be charged on any other instrument relating to such transaction. For example: Where stamp duty is already paid at the time of issuance of the Compulsorily Convertible Preference Share (CCPS), there is no need to pay stamp duty again on conversion of CCPS into equity.

The amended provisions of the Indian Stamp Act, 1899 and The Indian Stamp (Collection of Stamp Duty through Stock Exchanges, Clearing Corporations and Depositories) Rule, 2019 brought through the Finance Act, 2019 came into force w.e.f 1st July 2020.

Through the said amendments, the Сentrаl government hаs сreаted the legаl аnd institutiоnаl meсhаnism tо enаble Stаtes tо соlleсt stаmр duty оn seсurities mаrket instruments аt оne рlасe. The stаmр-duty оn sаle оf seсurities, trаnsfer оf seсurities аnd issue оf seсurities shаll be соlleсted оn behаlf оf the Stаte Gоvernment by the Сleаring Соrроrаtiоn аuthоrized by Stock Exchange оr Deроsitоries. The Сentrаl government hаs аlsо nоtified the Сleаring Соrроrаtiоn оf Indiа Limited (ССIL) аnd the Registrаrs tо Issue аnd / оr Shаre Trаnsfer Аgents tо асt аs соlleсting аgents.

Stamp Duty payable on the Issue of Securities (Shares / Debentures) in D mat or physical mode is .005%.

And Stamp duty payable on Transfer of shares in D mat or physical mode is .015%

And Stamp duty payable of Transfer of Debentures in Physical or D mat mode is .0001%