The Central Government has enforced the amendments to the Indian Stamp Act, 1899, as proposed under Part I, Chapter IV of the Finance Act, 2019, from July 1 onwards.
The amendments, related to collection of Stamp Duty on securities, were first scheduled to come into force on January 9, 2020, which was later extended to April 1, 2020 vide notification dated January 8, 2020. The implementation was further extended until July 1, 2020, vide a gazette notification dated March 30, 2020.
Amendments to the present system of collection of stamp duty on securities market transactions were introduced as the erstwhile system led to multiple rates for the same instrument, resulting in jurisdictional disputes and multiple incidences of duty, thereby raising the transaction costs in the securities market and hurting capital formation.
The Central Government has now created the legal and institutional mechanism to enable states to collect stamp duty on securities market instruments at one place by one agency.
"In order to facilitate ease of doing business and to bring in uniformity of the stamp duty on securities across States and thereby build a pan-India securities market, the Central Government, after due deliberations and consultations with the States, through requisite amendments in the Indian Stamp Act, 1899 and Rules made thereunder, has created the legal and institutional mechanism to enable states to collect stamp duty on securities market instruments at one place by one agency (through Stock Exchange or Clearing Corporation authorized by it or by the Depository) on one Instrument. A mechanism for appropriately sharing the stamp duty with relevant State Governments has also been developed which is based on the state of domicile of the buyer," the press note states.
This rationalized and harmonized system through centralized collection mechanism is expected to ensure minimize cost of collection and enhance revenue productivity.
To achieve the rationalization of stamp duty structures, the amendments, inter-alia, provide for the following structural reforms —
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