State likely to lower stamp duty on share transactions

State likely to lower stamp duty on share transactions

The move, official sources told Deccan Herald follows a representation and dialogue with the members of the Bangalore Stock Exchange (BgSE) recently on the issue.
Sources said since the stamp duty being levied is slightly higher in Karnataka than in the neighbouring states, it was represented that local brokerages/brokers were opening branches in neighbouring states to avoid incidence of high stamp duty to take advantage of lower duty structure existing in these states.
Official sources said that the revenue department, currently seized of the issue, was examining as to how best to rationalise and bring the stamp duty on par with other states.

A valid case
The brokers have a valid case and the government (revenue department) also feels that there is a justification for revamping the act to bring the rate on par, they added.

As per the Karnataka Stamp Act, 1957:  any share, scrip, stock, bond, debenture, debenture stock or other marketable, will attract stamp duty of Rs 1 for every Rs 10,000 or part thereof of the value of the security, at the time of its purchase or sale, as the case may be.

 Sources said currently, according to figures provided by the BgSE, there are over six lakh investors and five per cent of the trading volume is done on the National Stock Exchange and Bombay Stock Exchange.
BgSE officials said that brokers under it currently pay around Rs 20-22 lakh per month as stamp duty over a turnover of around Rs 1,200-1,500 crore depending upon the market sentiments.

Official sources said while in Andhra Pradesh the duty is 0.005 per cent for every Rs 10,000 or part thereof to a maximum of Rs 50, in Kerala too it was same with an upper limit of Rs 250; in Tamil Nadu it was 0.004 per cent upto a maximum of Rs 50. Only in Maharashtra, they said, there was a three-tier structure where for delivery it was 0.01 per cent., for square off it was 0.002 per cent and pro-trade commodity basis it was 0.001 per cent.  In Karnataka the duty was 0.01 per cent or Rs 1 for every Rs 10,000 with no upper limit. Sources said once the draft amendment is ready it will be placed before the State cabinet for formal approval and notification.