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Centre On Stamp Duty

In order to bring in Ease of Doing Business (EDoB), Government of India has advised the State Government to bring in changes for collection of Stamp Duty as the Union Government has brought in required amendments in the System.

Ministry of Finance has issued a directive to the State Government in this regard, while informing about the amendment brought in the Indian Stamp Act, 1899 and the Indian Stamp (Collection and Depositors) Rules, 2019.

The amended provisions of Indian Stamp Act have come into force and implementation will be from 1April, 2020.
In order to facilitate Ease of Doing Business and to bring in uniformity and affordability of the Stamp Duty on Securities across the States in order to build a Pan India Securities Market, Union Government has brought in amendments.

These steps have created Legal and Institutional Mechanism to enable the State Governments to collect Stamp Duty on Securities Market Instruments at one place by one agency(through Stock Exchanges or Clearing Corporations authorized by it or by the Depositors) on one instrument and develop mechanism for appropriately sharing the Stamp Duty with the State Government.

This rationalized and harmonized system through centralized collection mechanism is expected to address evasion of Stamp Duty, minimize cost of collection and enhance revenue productivity.

Further, this system will help develop equity markets and equity culture across the country, ushering in balanced regional development, officials say.

Accordingly the State Government will have to bring in changes in relevant notifications in view of the amended provisions of the Indian Stamp Act and Rules so as to achieve the objectivity of uniformity, EDoB and building Pan India Securities Market, pointed out the official.

The Stamp Duty on sale, transfer and issue of securities shall be collected on behalf of the State Government by the Collecting Agencts, who then shall transfer the collected Stamp Duty in the account of the State Government.

The Central Government has notified the Clearing Corporation of India Limited (CCIL) and the Registrars to an Issue and or Share Transfer Agents to act as a Collecting Agent.

Accordingly the State Government will also appoint a Nodal Officer for the purposes of collection of Stamp Duty.

The Amendment marks a very significant change in the manner in which stamp duty is levied and collected in relation to the issue, sale or transfer of securities.

While on one hand the Amendment aims to encourage compliance and eliminate incentives for rate shopping by prescribing lower and uniform rates for each instrument across the country,
 
 


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