Post the Union Budget 2019 scheduled on July 5, investment in direct stocks, mutual funds, ULIPs and NPS would become a bit more expensive for investors.
The new finance minister Nirmala Sitharaman is likely to bring clarity on the stamp duty tax on financial securities transactions, which was re-introduced in the interim budget 2019, said three MF CEOs.
The CEO of a top fund house requesting anonymity said that earlier AMFI had also sought clarification on who will bear the stamp duty tax on such transactions. Currently, TER does not include stamp duty tax. Hence, clarity on changes to TER structure is expected from the ministry, he said. He further said that ideally investors should bear stamp duty tax on mutual funds.
Since mutual funds deal with shares, every time a fund manager executes transaction, the fund has to pay stamp duty along with securities transaction tax. Industry experts estimate that mutual fund industry executes transaction of Rs.5 lakh crore each month in equity and debt markets. Clearly, the impact of stamp duty would be large.
He further said that while government is yet to announce the rate at which stamp duty will be levied on demat transactions, it is understood that it would be 0.005%.
Earlier, the government had waived off stamp duty on transaction of securities in demat form. However, the government has proposed to re-introduce this duty. Also, stock exchanges will have to track origin of investors to distribute stamp duty among states.