Stamp duty will be levied on the purchase of mutual funds from July 1, what will be the effect on investment?

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Parliamentary Committee meeting on 17 June on issues like Arogya Setu App, Data Security

Stamp duty on mutual funds from July 1
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Investors will also have to pay stamp duty on purchasing mutual funds from July 1. Even if you are investing in mutual funds through Systematic Investment Plan (SIP) and Systematic Transfer Plan (STP), you still have to pay stamp duty.

However, investors will not have to pay stamp duty on the withdrawal of mutual funds. This duty will be applicable on all types of debt and equity mutual funds. The impact of stamp duty will be seen most on debt funds. Let’s understand how the duty will affect your investment …

Purchase of mutual funds will attract stamp duty @ 0.005%. Apart from this, transfer of units of mutual funds from demat account will attract stamp duty of 0.015%. The imposition of stamp duty will affect the holding of 90 days and less.

Stamp duty for dividend reinvestment will be levied after deducting TDS on the amount of dividend. Stamp duty on purchase of dividend will be levied on the amount of purchase which will be less than the transfer charge. For example, suppose you have purchased a sum of Rs 1 lakh and charged a transaction charge of Rs 100, then the net purchase cost is Rs 1,00,100, but the stamp duty will be charged only on the purchase amount ie Rs 1 lakh. 1,00,100 and it will cost five rupees at the rate of 0.005.

Stamp duty will be levied on the purchase of mutual funds and not on withdrawals, so this amount is also seen as an entry load. Explain that in 2009, the Securities and Exchange Board of India removed the entry load on mutual funds.

Experts say that short-term investors of 30 days and less will be more affected by the imposition of stamp duty as stamp duty is imposed as a one-time check. Experts have explained the effect of stamp duty as an example …

Suppose you put one lakh rupees in a debt fund, on which you are getting five percent annual return. This means that after one year you will get a return of Rs 5,000 and Rs 416 a month. Now, stamp duty will be charged at the rate of five rupees.

If you invest in this fund for three months, then it will be Rs 1,248 in three months. On this, stamp duty will be charged at the rate of five rupees, but the longer you continue to invest, the less will be the effect of stamp duty.

Retail investors generally invest in liquid funds and not overnight funds. If there is a holding for more than a month, stamp duty will not have much effect.

Investors will also have to pay stamp duty on purchasing mutual funds from July 1. Even if you are investing in mutual funds through Systematic Investment Plan (SIP) and Systematic Transfer Plan (STP), you still have to pay stamp duty.

However, investors will not have to pay stamp duty on the withdrawal of mutual funds. This duty will be levied on debt and equity of all types of mutual funds. The impact of stamp duty will be seen most on debt funds. Let’s understand how the duty will affect your investment …

Purchase of mutual funds will attract stamp duty @ 0.005%. Apart from this, transfer of units of mutual funds from demat account will attract stamp duty of 0.015%. The imposition of stamp duty will affect the holding of 90 days and less.

Stamp duty for dividend reinvestment will be levied after deducting TDS on the amount of dividend. Stamp duty on purchase of dividend will be levied on the amount of purchase which will be less than the transfer charge. For example, suppose you have purchased a sum of Rs 1 lakh and charged a transaction charge of Rs 100, then the net purchase cost is Rs 1,00,100, but the stamp duty will be charged only on the purchase amount ie Rs 1 lakh. 1,00,100 and it will cost five rupees at the rate of 0.005.

Stamp duty will be levied on the purchase of mutual funds and not on withdrawals, so this amount is also seen as an entry load. Explain that in 2009, the Securities and Exchange Board of India removed the entry load on mutual funds.

Experts say that short-term investors of 30 days and less will be more affected by the imposition of stamp duty as stamp duty is imposed as a one-time check. Experts have explained the effect of stamp duty as an example …

Suppose you put one lakh rupees in a debt fund, on which you are getting five percent annual return. This means that after one year you will get a return of Rs 5,000 and Rs 416 a month. Now, stamp duty will be charged at the rate of five rupees.

If you invest in this fund for three months, then it will be Rs 1,248 in three months. On this, stamp duty will be charged at the rate of five rupees, but the longer you continue to invest, the less will be the effect of stamp duty.

Retail investors generally invest in liquid funds and not overnight funds. If there is a holding for more than a month, stamp duty will not have much effect.

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