Commodity brokers directed to clear dues, with late penalty; HC petition on levy pending since 2005.
The Maharashtra government has issued notices to a number of members of various commodity exchanges for immediate payment of pending stamp duty dues, along with a late penalty of two per cent per month.
A senior official of the collectorate of stamp duty said, “We have noticed that hundreds of brokerage firms (members) spread across the country have not paid the mandatory stamp duty for several years, though they recover these from their clients at the time of signing the contract note or executing orders. Therefore, we have issued notices to them to pay the pending duty immediately, with a monthly penalty rate on the unpaid duty. Failing which, action will be taken.”
The state government fee is Rs 1 for every Rs 100,000 of traded value as stamp duty on all commodity transactions through brokers in futures exchanges. In the previous annual state budget, it had proposed a controversial rise in the duty from Rs 1 per Rs 100,000 of traded value to Rs 5, later postponed indefinitely.
Trade sources say many brokers pay stamp duty to the state government in which their registered office exists. For example, a Kolkata-based trader pays to the West Bengal government even if the client’s trade is put through in Jaipur, Rajasthan.
“The law is confusing on the issue. It says stamp duty needs to be paid in the state of execution of orders. This means if the member exists in Maharashtra, it needs to pay stamp duty in this state. But members are confused whether to pay the stamp duty in the state of the client’s house or registration of their offices in case of corporate clients,” said Naveen Mathur, associate director (commodities and currencies) of Angel Broking.
The collectorate official said members need to pay the stamp duty to the state government in which the contract note was signed. So, if contract notes are signed in Maharashtra, the members should pay the stamp duty to us, he added.
A petition filed to clarify this was filed in the Bombay high court in 2005 and is still pending.
Meanwhile, the Forward Markets Commission (FMC), the commodity derivatives markets regulator, has also found in its regular audit inspections that several members have not paid stamp duty. The FMC is examining the matter.
To evade the duty, members often transfer their account into a different name, which FMC allows on a compliance report from the exchanges. “This is a matter the FMC should look into,” a trader said.
