President Approves Amendments to Indian Stamp Act 1899

President Ram Nath Kovind has given the assent for the amendments to the Indian Stamp Act 1899 introduced as part of the Finance Act 2019.

Amendments Proposed

The amendments proposed are:

• Creation of the legal and institutional mechanism to enable states to collect stamp duty on securities market instruments at one place by one agency (through the Stock Exchanges or Clearing Corporations authorised by the stock exchange or by the Depositories).
• A Mechanism for appropriate sharing the stamp duty with relevant state governments based on the state of domicile of the buying client.
• Creation of a Coordination Council comprising representatives from Union and States under Article 263 of the Indian Constitution tasked with the responsibility of making recommendations regarding review/revision of stamp duty rates.

Stamp Duty Rates

• The duties levied by Maharashtra will be taken as a benchmark as the state of Maharashtra accounts for 70% of the total collection.
• The rates would be chosen in such a manner that it provides a revenue neutral position to the state governments while reducing the overall tax burden for investors.
• The stamp duty will have to be paid by either the buyer or seller of financial security, as against the current practice of levying the duty on both.

Benefits of Proposed Amendments

The amendments will rationalise and harmonise the system of levying stamp duty and help curb tax evasion. The cost of collection would be minimised while revenue productivity is enhanced. Further adoption of the centralised collection mechanism is expected to bring in not only more revenue but greater stability to the revenue collection by the states.
The amendments would further aid in developing equity markets and equity culture across the length and breadth of the country, ushering in balanced regional development.

Month: Current Affairs - February, 2019