MP slashes stamp duty on share trade

In a move to boost share trading and keep check on speculations the Madhya Pradesh government has slashed the stamp duty from 0.01 percent to 0.002 per cent. With this move, the trade volumes in Indore and Bhopal may go up five-fold.

"This is a good step and will surely benefit us," said Pratik Dubey,a local share trader.

Earlier brokers had to pay Re 1 stamp duty on Rs 10,000 trade while in Mumbai the same duty was Re 1 for Rs 50,000 trade. Therefore to escape higher stamp duty local brokers issued contract notes from Bombay Stock Exchange (BSE).

MP government suffered major revenue loses due to this activity. Considering this the state government issued a notification on February 6 to reduce the stamp duty.

District registrar, N S Tomar said that the registration department collected Rs 5.50 lakh revenue from stamp duty levied on equity trade. This implies Rs 550 crore is trade being carried out in the city every month. New stamp duty rates are equal to the duty levied BSE trade. The move would boost local share trading.

Madhya Pradesh Stock Exchange (MPSE) of Indore had also demanded this cut in December 2004.

Following the new guidelines, brokers would now have pay the stamp duty within the state.

On evading this they will have to pay a penalty of up to 10 times the evaded amount. Besides, the administration can also seize and attach their property.