The President of India approves the Amendments in Indian Stamp Act

The President of India approves to the Amendments in Indian Stamp Act

Question: On 21st February, 2019; The President of India gave his assent to the Amendments to the Indian Stamp Act of-
(a) 1890
(b) 1899
(c) 1860
(d) 1885
Answer: (b)
Related facts:

  • On 21st February, 2019; The President of India, today, gave his assent to the Amendments to the Indian Stamp Act, 1899.
  • It was introduced as part of the Finance Act 2019 and was in fulfillment of the commitment made by the Union Government in the last Union Budget 2018-19 to take reform measures with respect to Stamp Duty regime on financial securities transactions in consultation with the States and make necessary amendments to the Indian Stamp Act, 1899.
  • The Finance Bill 2019 was passed by both Lok Sabha and Rajya Sabha, on 12th and 13th February, 2019 respectively.

Purpose:

  • The amendments propose to create the legal and institutional mechanism to enable states to collect stamp duty on securities market instruments at one place.
  • It will be done by one agency (through the Stock Exchanges or Clearing Corporations authorized by the stock exchange or by the Depositories) on one Instrument.
  • A mechanism for appropriately sharing the stamp duty with relevant State Governments based on state of domicile of the buying client is also proposed.

Background

  • The present system of collection of stamp duty on securities market transactions has led to multiple rates for the same instrument.
  • It resulted in jurisdictional disputes and multiple incidences of duty, thereby raising the transaction costs in the securities market and hurting capital formation.
  • This has also given scope for rate shopping and evasion of duty.

Government made the following Point:

  • To facilitate ease of doing business and to bring in uniformity and affordability of the stamp duty on securities across States and thereby build a pan-India securities market.
  • To create the legal and institutional mechanism to enable states to collect stamp duty on securities market instruments at one place by one agency (through Stock Exchanges or Clearing Corporations authorized by it or by the Depositories) on one Instrument.
  • To develop a mechanism for appropriately sharing the stamp duty with relevant State Governments.
  • Central Government, after due deliberations, in exercise of powers under Entry 91 of the List I and Entry 44 of List III of the 7th Schedule of Indian Constitution, has decided to amend the Indian Stamp Act, 1899.

Link:
http://pib.nic.in/PressReleaseIframePage.aspx?PRID=1565839

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