The Hindu Business Line : Maharashtra to slash stamp duty on commodity market transactions, G-secs

Industry & Economy - Taxation
Government - Financial Policy
Agri-Biz & Commodities - Commodity Markets

Maharashtra to slash stamp duty on commodity market transactions, G-secs

Our Bureau

Mumbai , March 21

THE Maharashtra Budget, having identified the need to retain leadership position enjoyed by Mumbai as the hub of financial and capital markets in the country, has decided to rationalise stamp duty on futures and forward trading. The State Finance Minister, Mr Jayant Patil, has proposed to reduce stamp duty on commodity market transactions by 90 per cent and that on sale or purchase of Government Securities by 95 per cent.

Currently, the stamp duty paid by brokers is Rs 1,500 on a Rs 5-crore, single lot deal. With the stamp duty being reduced by 95 per cent, this will effectively come down to Rs 75. Banks will be the ultimate beneficiaries of this move, said Head of Fixed Income, with a private bank.

"The slashing of stamp duty on G-secs will give impetus for larger transactions in the market. Volumes had dwindled after most banks shifted a large portion of their securities from active trading into the held to maturity basket," said a senior official with a leading public sector bank.

The other proposal aimed at the Government keeping pace with emerging markets concept is by restructuring certain provisions related to market transactions. The proposal is for the Government to enter into arrangements with the Stock Exchanges and trading platforms for collection of stamp duty as against the prevalent practice of collecting stamp duty from either the broker or investor.

The State Government has also decided to bring agreements relating to areas such as advertisement and broadcasting within the purview of Bombay Stamp Act, 1958. Also, the Government will try to introduce registration of leave and licence agreements, mortgages and hypothecation through banks.

The Government, while declaring a tax holiday on stamp duty for housing loans up to Rs 1 lakh, will reduce stamp duty for housing loans up to Rs 10 lakh by 50 per cent. With a view to encouraging commercial transactions, the Government has decided to reduce stamp duty on all types of mortgages from one per cent to 0.5 per cent.

"With the reduction of stamp duty on mortgages, a lot of people who were mortgaging offices outside Mumbai thinking the prices were too high can come back. The reduction of stamp duty on housing loans will also translate into lower costs for the borrowers in terms of mortgage costs," the banking sector official said.

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