Short, easy to comprehend answers to understanding various aspects of the latest stamp duty on mutual funds like how to pay the duty, where is it applicable and where not.

A quick Q&A thread about the latest Stamp Duty on Mutual Funds in India !!

From today i.e. 1st July20, Stamp Duty will be applicable on MFs

First How much?

For all Purchases in MFs, u will pay stamp duty of 0.005% , i.e. Rs. 5 for every Rs. 1 lac invested

Q: When u say I have to pay stamp duty, how will I pay?

Ans: When u purchase a MF, Stamp Duty will auto-deducted and paid to govt. U don’t hv to do anything.

For eg: if u 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 u 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 txns from today. SIP is a purchase. So, for ur SIP instalments from today – irrespective if u started SIP before – Stamp Duty will be levied

Q: So should I stop SIP?

Ans: Ofcourse 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 – u 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 txn. 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 u 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 whereever u buy MFs, u will pay it

Q: So will Stamp Duty reduce my returns?

Ans: U pay 0.005% as Stamp Duty. That is a negligible amount. If u 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 u invest, Rs. 1 lacs in a fund with NAV of Rs. 20

Earlier u would have got 5000 units (1 lac/20)

Now u 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 ur cost of acquisition)