The Gujarat government has decided to refund stamp duty to brokers for stock transactions if broking firms have their registered offices in the Gujarat International Finance Tech (GIFT) City. The move is expected to attract more broking companies to the special zone.
The state government issued a notification to this effect on March 30. Moneycontrol has reviewed a copy of the order.
In the past, different states in the country were charging different stamp duty rates for equity, currency and commodity transactions. Later, the Central government issued a uniform stamp duty structure across states. As per the new rule that came into force in January 2020, the responsibility for collecting stamp duty on transactions lies with exchanges, clearing corporations and depositories.
Currently, a 0.2 percent uniform stamp duty is collected by the government on all transactions.
Earlier, brokers used to shift their registered offices to states charging lower stamp duty as it was a state subject. A broker told Moneycontrol: "Sometime back, many brokers shifted their registered office from Delhi to Uttar Pradesh to gain the benefit of a lower duty regime."
Last year, Finance Minister Nirmala Sitharaman had announced that exchanges would collect stamp duty for stockbroking transactions and submit it to the state government. The decision was taken after several representations by brokers’ associations.
Another Mumbai-based broker cheered the Gujarat government’s move. "Gujarat’s refund policy will prompt several brokers to move their registered offices to GIFT City, especially proprietor traders who trade mainly in derivatives. They give the maximum amount of stamp duty. In derivatives trading, a large number of transactions are executed by proprietor traders," he pointed out.
GIFT City in Gandhinagar, India’s first international financial services centre, is the dream project of Prime Minister Narendra Modi. The zone was opened in late 2016.
The Bombay Stock Exchange and the National Stock Exchange have already established their subsidiary exchanges in the international financial services centre. Multi Commodity Exchange also has acquired land in this area.
