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  • Is stamp duty applicable on units of Mutual Fund?

    Sub-Section 23A of Section 2 of the Indian Stamp Act, 1899 defines securities as including securities defined in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956 (SCRA). Further, it may be noted that clause (h)(id) of Section 2 of SCRA, 1956, which defines “securities” includes “units or any other such instrument issued to the investors under any mutual fund scheme” under its ambit. Therefore, units of Mutual Fund Schemes are to be considered as securities for the purpose of applicability of stamp duty also.

    For more information on Indian Stamp Act, 1899, click here. For more details about the amendments, refer here.

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  • Which section of amended Indian Stamp Act, 1899 (section 9A or 9B) is applicable for Mutual Funds for the purposes of collection and transfer of stamp duty to States/UTs?

    Since RTI and/or STA of Mutual Funds have been declared as Depositories under the Stamp Act vide gazette notification dated 8th Jan, 2020, the entire mutual fund business gets covered under Section 9A of the Indian Stamp Act. Section 9B is not applicable to them. RTAs have to function like a Depository in respect of collection of Stamp Duty on issue and sale or transfer of mutual funds in SoA form. The extant Stamp Rules applies to them as well i.e. the operational clause for them is Section 9A and not 9B of the Indian Stamp Act.

    For more information on Indian Stamp Act, 1899, click here. For more details about the amendments, refer here.

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  • Who will collect and transfer the Stamp duty to States in case of transactions in units of Mutual Funds and AIFs in Statement of Account/ Physical (non-demat form)?

    To provide for collection of Stamp Duty on transactions in mutual fund and AIF units in the statement of account/physical (non-demat) form, RTI and/or STA have been notified (vide Gazette Notification dated 8th January, 2020) as a “Depository” for the limited purposes of acting as a “collecting agent” under the said Act and the Rules made thereunder. Accordingly, for non-demat Mutual Fund and AIF transactions, collection of stamp duty by RTAs shall be governed by the provisions of Section 9A(1)(b) and 9A(1)(c) and the transfer of stamp duty to the respective States shall be governed by the provisions of Section 9A (4). Thus, the transfer of collected stamp duty to respective States/UTs by RTAs also is governed by buyer-based principle as covered in Section 9A(4) and not on the basis of registered office of the issuer.

    For more information on Indian Stamp Act, 1899, click here. For more details about the amendments, refer here.

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  • Is stamp duty is applicable on redemption of Mutual Fund units ?

    Redemption is not liable to duty as it is neither a transfer nor an issue nor a sale.

    For more information on Indian Stamp Act, 1899, click here. For more details about the amendments, refer here.

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  • What are the stamp duty rates being implemented through the Amended Indian Stamp Act?

    Stamp Duty Rates w.e.f. 1st July 2020

    Instrument Rate
    Issue of Debenture 0.005%
    Transfer and Re-issue of debenture 0.0001%
    Issue of security other than debenture 0.005%
    Transfer of security other than debenture on delivery basis 0.015%
    Transfer of security other than debenture on non-delivery basis  0.003%
    Derivatives  
    (i) Futures (Equity and Commodity) 0.002%
    (ii) Options (Equity and Commodity) 0.003%
    (iii) Currency and Interest Rate Derivatives 0.0001%
    (iv) Other Derivatives 0.002%
    Government Securities 0%
    Repo on Corporate Bond 0.00001%

     

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  • Is stamp duty applicable at multiple levels of a single transaction (on account of procedural requirements) and to which state government should the stamp duty amount be transferred in such cases?

    It should be ensured that a double incidence of stamp duty doesn’t occur on any transaction. Where, before being credited in the buyer’s Demat account, the securities were transferred from the Demat accounts of an issuer to the clearing corporation, member, etc., the stamp duty shall be transferred to the state government where the residence of the buyer is located.

    For more information on Indian Stamp Act, 1899, click here. For more details about the amendments, refer here.

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  • Will stamp duty be charged on off-market transfer of securities without consideration such on gift, legacy transfer etc?

    No, Section 21 of the Amended Indian Stamp Act read with sub-section 16B of Section 2 clearly indicates that stamp duty is to be collected on market value which is based on price or consideration involved.

    For more information on Indian Stamp Act, 1899, click here. For more details about the amendments, refer here.

     

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  • How is stamp duty calculated in case of issuance of Mutual fund Units?

    Stamp duty is imposed on the value of units excluding other charges like service charge, AMC fee, GST etc. If the units are issued for INR1 crore then INR 500 would be the stamp duty to be remitted to States.

    For more information on Indian Stamp Act, 1899, click here. For more details about the amendments, refer here.

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  • On transfer of units of Mutual Funds and AIFs held in physical form stamp duty is to be collected from the transferor. As these transfers happen outside the purview of RTAs what will be process of collection and remittance of stamp duty?

    Stamp duty has to be collected and remitted only by collecting agents (RTA for physical units and Depositories for demat units). Where Mutual Fund and AIF units are issued in physical form, stamp duty has to be collected and remitted by RTA. Accordingly, when the transferee approaches RTA for effecting the transfer in their books, RTA will be collecting the stamp duty from the transferor before effecting the transfer which will then be remitted to the state of domicile of the transferee.

    For more information on Indian Stamp Act, 1899, click here. For more details about the amendments, refer here.

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  • How will the State Government communicate regarding stamp duty matter?

    The State Government shall appoint a nodal officer for all official communications with the principal officers (appointed representatives of collecting agents) for the purposes of collection of stamp-duty in accordance with stamp duty Rules.

    For more information on Indian Stamp Act, 1899, click here. For more details about the amendments, refer here.

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  • What are the different kinds of duties of custom levied on imported goods?

    Different kinds of duties of customs levied on imported goods are

    (i) Basic Customs Duty

    (ii) Additional levies like Countervailing duty, Anti dumping duty, safe guard duty etc.

    In addition, cess duty is leviable on certain goods.

    Section 12 of the Customs Act, 1962 authorises the Customs Officers to levy and collect these duties.

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  • What is custom duty and its different types ?

    Customs duty is the duty charged on goods on their importation into India or exportation out of India.

    There are two types of rates of duty of Customs:

    1. Ad valorem rate i.e., the duty is charged on the basis of value.

    2. Specific rate i.e., on the basis of quantity/number/ volume

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  • Can an Indian company invoice in Indian Rupees? Will such a company be eligible for exports benefits?

    As per para 2.52 FTP 2015-20, all export contracts and invoices shall be denominated either in freely convertible currency or Indian rupees but export proceeds shall be realized in freely convertible currency. However, export proceeds against specific exports may also be realized in rupees, provided it is through a freely convertible Vostro account of a non resident bank situated in any country other than a member country of Asian Clearing Union (ACU) or Nepal or Bhutan. Additionally, rupee payment through Vostro account must be against payment in free foreign currency by buyer in his non-resident bank account. Free foreign exchange remitted by buyer to his non-resident bank (after deducting bank service charges) on account of this transaction would be taken as export realization under export promotion schemes of FTP.

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  • What is provisional assessment?

    When an importer/ exporter is unable to produce necessary  documents or information for assessment of duty on goods, or when the necessary documents are needed to produce but the proper officer of customs may deem it necessary to make further enquiry for assessing the duty, he may resort to provisional assessment, pending such enquiry a provisional assessment of goods maybe be requested. 

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  • What are ‘Project Imports’? What are the advantage of importing under project import regulation?

    Project Imports are the imports of machinery, instruments, and apparatus etc., required for initial sating up of a unit or for substantial expansion of an existing Unit. The exported goods are charges duty at a flat rate of duty under the same tariff heading. Project Imports assessment is a scheme of assessment which is designed to help expeditious and easy assessment of variety of industrial goods falling under different chapters of the Customs Tariff.

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  • What are the documents to be filled to clear the imported goods for home consumption?

    1) Supplier’s invoice.

    2) Import Authorisation, if applicable

    3) Bill of lading (original and non-negotiable).

    4) Packing list (2 copies).

    5) If invoice is for FOB, freight charges and insurance premium amount certificate should be attached.

    6) Catalogue/write/up/drawing for machinery items.

    7) If second hand machinery is being imported then Chartered Engineers certificate is necessary as per the Import Export Policy

    8) If steel is being imported then analysis certificate from manufacturers.

    9) In the case of chemicals & allied products like synthetic resin wax, literature showing chemical composition.

    Apart from the above the importers are also required to file declaration in the prescribed form by the importers regarding correctness of the contents and the value of the goods.

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  • When should the bill of entry be filed and what are its different kinds?

    Bill of entry can normally be filed to clear the goods after the Import General Manifest (IGM) is presented to the Customs Officers by the Steamer Agents / Airlines, as the case may be. 

    The following are the types of Bill of Entry 

    •Home consumption Bill of entry: This has to be filed when the importer wants to clear the goods on payment of duty and remove them to his premises immediately. 

    •Into bond Bill of entry:  It is also known as Warehousing Bill of Entry.  This has to be filed when the importer does not want to pay duty immediately but prefers to keep the goods in a warehouse and pay the duty subsequently and clear the goods for home consumption.

    •Ex-bond Bill of entry:  This has to be filed when the importer wants to clear the warehoused goods for home consumption on payment of duty

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  • What are Rules of Origin (ROO)?

    They are the criteria needed to determine the of a product for purposes of international trade. It is important because duties and restrictions in several cases depend upon the source of imports. Rules of origin are used: to implement measures and instruments of commercial policy such as antidumping duties and safeguard measures;, whether imported products shall receive most-favoured-nation (MFN) treatment or preferential treatment, for trade statistics; for the application of labelling and marking requirements; and for government procurement.

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  • What are the goods eligible for being financed under the LOCs?

    Under the LOCs, export of capital goods, plant and machinery, industrial manufactures, consumer durables and any other items eligible for being exported under the 'Exim Policy' of the Government of India can be financed.

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  • What are the benefits of the LOC to the overseas importer of Indian goods and services?

    Exim Bank has been using the LOC mechanism for promoting India's exports to the traditional as well as new markets in developing countries, which need deferred credit for buying Indian machinery, goods and services. As the LOC is extended by Exim Bank on internationally competitive terms, the overseas importer of Indian goods is allowed access to the credit facility at competitive interest rates. The overseas importer and the Indian exporter do not have to negotiate credit terms separately as the credit arrangement between Exim Bank and the overseas borrower financial institution is already in place. 

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