Financial Daily from THE HINDU group of publications
Wednesday, Mar 22, 2006
Markets - Financial Markets
Industry & Economy - Budget
Government - Policy
Maharashtra scraps stamp duty on non-local brokers
Officials say that some brokers located outside the State were paying the duty as there was no official announcement on this.
The stock exchanges were collecting the duty and remitting it to the Government.
Mumbai , March 21
The Maharashtra Government has reversed its decision taken a year ago to impose stamp duty on sale and purchase of shares by brokers located outside the State but using BSE and NSE terminals.
Presenting the Annual Budget 2006-07 on Tuesday, the State Finance Minister, Mr Jayant Patil, said, "I propose to exempt the stamp duty on record of transactions relating to sale and purchase of securities by brokers and investors residing outside Maharashtra."
The State Government's decision to impose such a tax had led to much criticism from brokers across the country. They questioned the State's right to levy such a tax on transactions executed outside the State's limits.
Subsequently, some time last year, Ministry officials had clarified that such a tax would not be levied but no step was taken to officially amend the Act.
However, brokers and investors who reside within Maharashtra would continue to pay this tax.
Exchange officials say that some brokers, about 5-10 per cent, located outside the State, were paying the duty as there was no official announcement on this. The stock exchanges were collecting the duty and remitting it to the Government.
The Budget also proposed that the stamp duty rate applicable on securities' transactions on self-account has been reduced from 20 paise to 10 paise for every Rs 10,000. Exemption is also proposed on stamp duty on the sale or purchase of Government securities when the transaction is on a principal-to-principal basis.
Stamp duty on deposit of title deeds, mortgage of movables, pawn, pledge, and hypothecation deeds has also been reduced from 0.5 per cent to 0.1 per cent. On unsecured loans, the applicable rate of stamp duty has been reduced from 0.25 per cent to 0.1 per cent.
It is also proposed to give relief in registration fee for deposit of title deeds. The documents, which are currently charged at 1 per cent, would be charged at the rate of 0.1 per cent.
Taking into consideration the booming road construction projects in the State and implementation of such projects on Build, Operate and Transfer system and the toll-tax regime, the Budget proposes to create a separate legal status to the documents created under this new system and the tax regime. It would be created by introducing a new article in the Bombay Stamp Act. The new applicable rate for both types of documents will be 0.1 per cent, subject to a maximum of Rs 5 lakh.
Stamp duty exemption has also been proposed on delivery orders of gem and jewellery, which have been imported for processing and subsequent export.
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