Stamp duty on mutual funds to apply from July 1

New Delhi: From July 1, 2020, stamp duty will be imposed on the purchase of mutual funds, including systematic investment plans (SIPs) and systematic transfer plans (STPs), but not on the redemption of units.

The duty will apply to all mutual funds—debt as well as equity. However, its impact will be felt the most on debt funds, which are typically held for short periods, as we explain below.

The stamp duty will be imposed at a rate of 0.005% on the purchase or switch-in amount.

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%.

Due to its design, the stamp duty is likely to have the most impact on short holding periods of 90 days or less.

The implementation of the stamp duty was initially slated for January but was postponed first to April and then to July. The stamp duty will apply to all kinds of mutual fund purchases, including lump sum, SIP, STP and dividend reinvestment.

 

Asianet.in/Desk: Asianet Online