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Investors are no longer required to pay stamp duty for opening of demat accounts under the new guidelines introduced by the market regulator SEBI.
Simpler, cheaper The Securities and Exchange Board of India through a circular early this week made the contractual relationship between depositor participants and dematerialised securities account holders a little simpler and a bit cheaper. Accordingly, an agreement, which was required to be signed between a DP and demat account holder, is no longer needed. Instead, SEBI has introduced a simple text matter or term sheet known as “Rights and Obligations” to be signed by the two.
The depository participant is required to provide a copy of the new document to the demat account holder and take an acknowledgement of the same, among others. The new document would be mandatory and binding on all the existing and new clients and depository participants, the regulator had said. This document will not attract any stamp duty.
The earlier agreement document was to be on a stamp paper.
Varying benefits “This will harmonise the account opening process for trading as well as demat account. This will also rationalise the number of signatures by the investor, which he is required to affix at present on a number of pages,” it said
This would benefit new demat account holders in most States in varying degrees depending on the local stamp duty rates required for such documents. For example, in Maharashtra, a new account holder would have had to fork out a stamp duty of Rs 100 in the earlier format.
According to market insiders, in West Bengal the stamp duty rate for such a document was Rs 10.
A broking firm official said the new format would make things hassle free. “In most cases, the availability of stamp paper of appropriate value has always been an issue at the nearby vends, whether down town Mumbai, Delhi or Kolkata. The new format would free the processing of the papers of such unwanted hassles.”
The market regulator had earlier changed the format for the trade/transaction agreement between a brokerage and its client.
The decision was taken in consultation with associations of stock brokers and both the depositories — CDSL and NSDL — and depository participants.
> jayanta.mallick@thehindu.co.in
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