Stamp Duty on Securities (Central Uniform Rate)
Following the 2020 amendment to the Indian Stamp Act, 1899, a uniform central stamp duty framework replaced the earlier fragmented state-wise stamp duty regime on securities transactions, with rates of 0.015% on delivery trades and 0.003% on intraday and derivatives trades, collected by exchanges and remitted to the state governments based on the buyer's state of residence.
Prior to the amendment that came into effect on 1 July 2020, stamp duty on securities was levied by individual state governments under their respective Stamp Acts, resulting in a patchwork of rates across the country. Some states had higher stamp duty on debentures and other instruments. The fragmented framework also created confusion around which state's duty applied to electronic transactions that had no physical delivery component, and it was poorly enforced in practice.
The Finance Act 2019 amended the Indian Stamp Act, 1899 to introduce a centralised stamp duty collection mechanism for securities transactions executed through or cleared by recognised stock exchanges or depositories. The amendments came into force from 1 July 2020 after multiple postponements due to the COVID-19 pandemic.
Under the revised framework, the rates were standardised nationally. For delivery-based equity transactions (both purchase and sale in the demat segment), stamp duty was levied at 0.015% of the transaction value, collected only once (on the buy side). For intraday equity trades, F&O, and other non-delivery instruments, the rate was 0.003% on the buy side transaction value. For debt instruments including bonds and debentures, separate rates applied.
The collection mechanism was made electronic and centralised. Stock exchanges and clearing corporations collected the stamp duty at the time of settlement and remitted it to the state government corresponding to the state of residence of the buyer, as per the address registered with the broker. This resolved the earlier ambiguity about which state's duty applied and ensured revenue reached the correct state government.
For an investor buying Rs 1 lakh worth of listed equity shares on delivery, the stamp duty payable was Rs 15 (0.015% of Rs 1,00,000). For a futures contract with notional value of Rs 5 lakh, stamp duty on purchase was Rs 15 (0.003% of Rs 5,00,000). These amounts, while small in isolation, appeared as a line item in contract notes and contributed to the total transaction cost.
Stamp duty was not the same as STT and appeared as a separate charge in contract notes. It was deductible as cost of acquisition for capital gains computation purposes for delivery trades, adding marginally to the cost base of acquired shares.