Stamp Duty now applicable on MF Transaction

As per the notification from Revenue Department, Finance Ministry, Government of India, Stamp duty of 0.005% of the transaction value will be applicable on Purchase transaction of Mutual Fund effectively from 1st July 2020.

What are the key changes?

1. Stamp Duty is applicable on physical and demat purchase transaction which includes Lumpsum, SIP/ STP in Transaction, Switch in and Dividend Reinvestment. However, this is not applicable on Redemption, STP Out and Switch out transaction.

2. Units will be allotted for the amount available post deduction of Stamp duty.

Here is how this will be implemented –

For Ex. – If you will invest Rs. 1,00,000 then as per stamp duty charge of 0.005% which is Rs. 5 will be deducted and only Rs. 99,995/- will be invested in the scheme.

How will this impact MF investors?

The impact of stamp duty charge will be negligible in case if an investor is looking for a long term investment. However, this will reduce the return of short term investors specially like Bank and Corporates who invest into liquid funds / overnight funds / Low duration fund and Ultra Short term fund.

Detailed notification released from AMFI can be read by clicking here

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