M'shtra govt lifts duty on non-delivery stock trades

The Maharashtra government has decided to exempt all non-delivery based transactions generated outside the state from stamp duty.

Earlier in May, the state had amended the Bombay Stamp Duty Act and imposed stamp duty on all non-delivery based transactions on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE).

Market participants reacted sharply against the proposal and approached the Security and Exchange Board of India (Sebi) which, in turn, approached the finance ministry.

A senior state government official said, "At a meeting with the representatives of BSE, NSE and Sebi, we made it clear that we never intended to collect tax on transactions generated outside the state. However, since representatives from these bodies wanted specific provision in the act itself, we have agreed to amend the act accordingly."

He added, "The finance ministry is currently examining the proposal and an amendment to the act will be carried out after getting the finance ministry clearance."

Brokers had objected to the state government move because it amounts to double taxation as outside traders have to pay stamp duty in their states too.

However, the government claimed that it was impossible to segregate trades generated outside and within the state. Besides these transactions made on BSE and NSE were subject to court jurisdiction in Mumbai, so the state government was well within its right to impose such duty.