Date:25/07/2005 URL: http://www.thehindubusinessline.com/2005/07/25/stories/2005072500751400.htm

Back NSE transactions: No stamp duty for deals outside Maharashtra

Rahul Wadke

Mumbai , July 24

ALLAYING fears of stock brokers having membership in the National Stock Exchange but located outside Maharashtra, State authorities have said that the newly introduced stamp duty on securities transactions will not be applicable to them.

Mr Krishna S. Vatsa, Revenue Secretary, Government of Maharashtra told Business Line said that the stamp duty would not be applicable to brokers having offices and trading platforms outside the jurisdiction of Maharashtra, although the NSE server is located in Mumbai.

"We will not levy stamp duty on outstation brokers and investors. For example, if the transaction happens between Kochi and Chennai, it will not attract stamp duty. However, if the transaction is between Mumbai and Kochi, then it will attract stamp duty, provided the broker has a registered office in Maharashtra, " he said.

Mr Vatsa said that the State Government is faced with the problem of getting the data from NSE for calculating the stamp duty.

"We do not want a `assessment based' stamp duty collection. However the NSE is insistent upon this system. We want to levy, stamp duty based on transactions, as the `assessment based' system is full of loopholes and leaves room for corruption and evasion, Mr Vatsa said.

The State Legislature had passed the Bill on stamp duty last week. However, stockbrokers, especially those trading on the NSE, are unclear about payment of the stamp duty, especially when the actual transaction has taken place outside Maharashtra. In fact, some of Delhi-based brokers have even approached the court over the issue.

According to a source in a large brokerage firm, having pan-India operations, the jurisdiction issues about payment of stamp duty is an unclear area. "Currently stamp duty on all our transactions across India is paid in Mumbai. Now with other States also taking up stamp duty issue and wanting a stake in the revenue pie, we are in a fix. Moreover, as the NSE servers are located in Mumbai and Chennai, the question as to where we should pay the duty remains", said a broker.

While there is news in the market that the Andhra Pradesh Government is bringing a levy, similar to the one that Maharashtra has introduced, the brokers are faced with the spectre of more State Governments following suit.

Says a Kerala-based stockbroker on NSE, "Stamp duty should be collected only by the State Governments concerned. If more than one State Government enforces the duty, then there could be duplication. This can be legally challenged."

Thus, transactions on the Internet or those of the computer-to-computer-link variety, with multi-location offices, could fall under these grey areas. The stockbrokers are hopeful of a speedy resolution to the latest speed-breaker from the Maharashtra Government.