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Stamp Duty On Mutual Funds from 1st of July, 2020

Updated: Jul 15, 2020

Beginning from 1 July 2020, you would be charged a stamp duty of 0.005% on all mutual fund purchases in accordance with the orders issued by the Government of India.


Apart from this, stamp duty will also be imposed on the transfer of mutual fund units such as transfers between Demat accounts at 0.015%. Purchases include lumpsum, SIP, Switch-in (including triggers from past STP registrations), and Dividend Reinvestment transactions. All categories of mutual fund schemes (including Exchange Traded Funds) would be covered under stamp duty charges. However, there would be no stamp duty on redemptions, conversion from physical mode to Demat mode, transfer from dividend to growth, or vice-versa for the purpose of physical mode to Demat (essentially wherever consideration is not involved).


How will stamp duty be charged?

Stamp duty will be charged on the value of mutual fund units after the deduction of all other charges like transaction charges. Given below is the formula to calculate stamp duty: Stamp Duty = (Amount Invested – Transaction charges)*0.005 / 100.005 Let’s understand this with an example: Amount Invested = INR 1,00,100 Platform Transaction Charges = Rs. 100 Stamp Duty = INR 5 (i.e. (INR 1,00,100 - INR 100)*0.005/100) NAV of Fund = INR 10 Units Allotted = 9,999.50 (i.e. (INR 1,00,100 - INR 100 - Rs. 5)/10)

Please note that this change has come into effect due to the recent amendments made in the Indian Stamp Act 1899.

 

Disclaimer: The materials provided herein are solely for information purposes. The information presented on this site does not constitute legal or professional advice and should not be relied upon for such purposes or used as a substitute for legal advice from an attorney licensed in your state.

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