New Delhi, February 22:Taking into consideration the reform measures with respect to Stamp Duty regime on financial securities transactions in consultation with the States, president Ramnath Kovind gave his approval to the amendments abide the Indian Stamp Act,1899, which were introduces as a part of the Finance Act this year.
The amendments propose to create the legal and institutional mechanism to enable states to collect stamp duty on securities market instruments at one place by one agency on a single Instrument. A mechanism for appropriately sharing the stamp duty with relevant State Governments based on state of domicile of the buying client is also proposed.
The proposed rationalised and harmonised system is expected to lead to zero tax evasion further along with minimising the cost of collection while revenue productivity is enhanced. Adoption of the centralised collection mechanism is meanwhile, expected to bring in not only more revenue but greater stability to the revenue collection by the states. Further, this system will help develop equity markets and equity culture across the length and breadth of the country, ushering in balanced regional development.
In order to facilitate ease of doing business and to bring in uniformity and affordability of the stamp duty on securities across States and thereby build a pan-India securities market, the Central Government, after due deliberations, has decided to amend the Indian Stamp Act, 1899. This will also aid to create the legal and institutional mechanism to enable states to collect stamp duty on securities market instruments at one place by one agency, on one Instrument and develop a mechanism for appropriately sharing the stamp duty with relevant State Governments.
“The present system of collection of stamp duty on securities market transactions has 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. This has also given scope for rate shopping and evasion of duty”, uttered the statement in relation.