Relevant Date: 21st February 2019

Introduced by: The Finance Act, 2019

Reason for the Amendments

The current mechanism of collection of stamp duty on securities market transactions has subject 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 amendments have brought with respect to securities market transactions.

Benefits of Amendments

  • It will help in ease of doing business and in self dependent .
  • It will bring in uniformity and affordability of the stamp duty on securities across state
  • Build a PAN-India securities Market.
  • Lower cost of collection
  • Enhance the revenue productivity
  • Will Develop equity market
  • Balance the regional developments

Amendment in Schedule I

Changes in the various rates of stamp duty

In Article 27 of Schedule I, the followings rates has changed

For debentures the rates of stamp duties shall be as follows-
1 In Case of issue of debentures 0.005%
2. In case of transfer of debentures 0.0001%
3. In case of re-issue of debentures 0.0001%

In Article 56A of Schedule I, the followings rates has changed-

For securities other than debentures the rates of stamp duties shall be as follows-
1 In Case of issue of security other than debentures 0.005%
2. In case of transfer of security other than debentures on delivery basis 0.015%
3. In case of transfer of security other than debentures on non- delivery basis 0.003%

For derivatives  the rates of stamp duties shall be as follows-
1 In case of Future derivatives (Equity and commodity) 0.002%
2. In case of Options (Equity and Commodity) 0.003%
3. In case of Currency and interest rate derivatives 0.0001%
4. In case of other derivatives 0.002

For Government security the rates of stamp duties shall be as follows-
1 Government securities 0%

For Corporate Bonds the rates of stamp duties shall be as follows-
1 Repo on Corporate Bonds 0.00001%

Amendment in Section 76

Insertion of new sub section 2A

As per section 76(2A) each rule made by the Central Government under this Act shall be laid, as soon as may be after it is made, before Lok sabha and Rajya Sabha, during  in it is session, for a total period of 30 days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, Lok Sabha and Rajya Sabha agree in making any modification in the rule or Lok Sabha and Rajya Sabha  agree that the rule should not be made, the rule shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule.”

Amendment in Section 21

Under this section the words “The value of such stock or security according to the average price or the value thereof on the day of the date of the instrument” shall be replaced by the words “The Market value of such stock or security.”

The new proviso shall be inserted;

“Provided that the market value for calculating the stamp-duty shall be, in the case of—

  • options in any securities, the premium paid by the buyer;
  • repo on corporate bonds, interest paid by the borrower; and
  • Swap, only the first leg of the cash flow.”.

New Section: Section 8A

Section 8A talks about the Securities dealt in depositories not liable to stamp duty

Section 8A has the overriding effect on this Act or any other act for the time being in force.

As per section 8A-

No deed of stamp in following case

A Entity who issue securities shall in respect of such issue, by the issue of securities to one or more depositories, be chargeable with the duty on the total amount of the securities issued by it and such securities need not to be stamped under the Act;

In case of transfer of ownership, which has register, of securities from a person to a depository or from a depository to a beneficial owner shall not be liable to stamp duty?

Explanation for the above;

For the Purpose of this section, the words beneficial ownership have the same meaning as under section 2(1)(a) of the depositories Act, 1996

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