A quick Q&A thread about the latest Stamp Duty on Mutual Funds in India !!
From 1st July 2020, Stamp Duty will be applicable on MFs
First How much?
For all Purchases in MFs, you will pay stamp duty of 0.005% , i.e. Rs. 5 for every Rs. 1 lac invested
Q: When you say I have to pay stamp duty, how will I pay?
Ans: When you purchase a MF, Stamp Duty will auto-deducted and paid to govt. You don’t have to do anything.
For eg: if you invest 1 lac in any MF, the RTA (CAMs or Karvy) will deduct Rs. 5 (0.005%) as Stamp Duty from this
Q: When I sell MFs, will stamp duty be applicable?
Ans: No. Only when you purchase MFs,
Q: Is it applicable on my existing MFs also?
Ans: No, it is only on fresh purchases from today. Existing units, no impact !!
Q: On SIPs?
Ans: Yes on SIPs too
Q: On STPs?
Ans: Yes
Q: My SIP started 2 years back, so will I still pay Stamp Duty
Ans: Yes, for all buy transactions from today. SIP is a purchase. So, for your SIP instalments from today – irrespective if you started SIP before – Stamp Duty will be levied
Q: So should I stop SIP?
Ans: Of course Not, the amount is too miniscule to significantly impact your long term goals !!
Q: For STP – Explain in detail
Ans: For eg: First say I put 1 lac in liquid fund and from their shift 10k every week to equity fund
First stamp duty will be charged on 1 lac
Then everytime 10k shifts to equity – since it is purchase of equity fund – you pay again stamp duty
Q: For Switches?
Ans: Same rule applies. Everytime u switch, it is considered as a buy in the Switch-in scheme
Q: Isn’t this double Stamp Duty?
Ans: No. Switch or STP is just a simple mechanism to help transactions. It is a sell and buy
Q: But is it only for Demat mutual Funds?
Ans: Stamp Duty is for both kinds of units – Demat units also and normal account statement units also.
Q: I buy DIRECT mutual funds? For me, will I pay stamp duty
Ans: Yes, even if u buy DIRECT MFs
Q: I buy on Fund House website, Will I pay Stamp Duty?
Ans: Doesn’t matter where you buy from, Stamp Duty is applicable
Q: But I don’t buy on Stock Exchange, will I still pay Stamp Duty
Ans: YESSSS! Pls understand from where ever you buy MFs, you will pay it
Q: So will Stamp Duty reduce my returns?
Ans: You pay 0.005% as Stamp Duty. That is a negligible amount. If you are a long term investor – there is no significant impact. Don’t worry.
Q: Which types of MFs – Debt also or only Equity MFs?
Ans: On all kinds of MFs
Q: So for liquid funds, overnight funds also ?
Ans: Yes all kinds of MFs
Q: For ETFs?
Ans: Yes on ETFs also
Q: FMPs, Close Ended Funds?
Ans: Yes
Q: Can u pls give example?
Ans: Let’s say you invest, Rs. 1 lacs in a fund with NAV of Rs. 20
Earlier you would have got 5000 units (1 lac/20)
Now you will get 4999.750 units. ( 1 lac – Rs. 5)/20
So it marginal impact
Q: If I invest 1 lac, I will now get units for 99,995
For purposes of tax calculation i.e. LTCG or STCG what will be my cost of acquistion?
Ans: No Change
Earlier: Cost 1 lac
Now: Cost 1 lac (Stamp Duty is considered and included as your cost of acquisition)
Hope it helps. For more details or answers, you can follow my profile and message me!
Happy Investing!!
Pramada Finserv 