Stamp duty is the biggest cost for traders. Now I find prostocks offers Rs.50 stamp duty for all traders residing outside Maharastra.
Reason as per prostocks website: “We process and execute contract notes of our clients resident outside Maharashtra at our registered office at Daman and charge them stamp duty at the rates applicable in the Union Territory of Daman and Diu.”
Why not zerodha follow this model.
Regards
@venkatzerodha, the broker will be taking a huge risk if he is following this policy . All the big state governments have sent notices to the exchanges asking that brokers have to collect stamp duty as per the state of residence of the client and not based on where the head office is.
Brokers who are non-compliant will definitely receive notices at some point of time asking to pay the stamp duty as per the state where the client is residing. Imagine the huge financial risk the broker would be taking at that point when a notice is sent to pay the stamp duty along with a delayed interest to it. Both for his business and for all the clients trading with them if he is not liquid enough to pay.
@abbanerjee: It’s compulsory for a broker to send contract notes to the clients on days they’ve traded. The client doesn’t get an option to choose to receive/not receive contract notes.
Thanks @VenuMadhav: India is probably one of the few markets where taxes are 5 times the lowest brokerages for F&O…
Unfortunately I reside in a rip off state.
Loop holes are a lot more confusion than traders can handle: A brief from http://insiderview.comparebrokerages.in/stamp-duty-demystified/
Million dollar question – Which Stamp Authority/State Government?
This is where all the confusion exists,
The lawyers say: Stamp duty was originally a part of the Indian Service Tax Act, and as per that act a tax is applicable at the point of service.(added by venkat: Remember traders only place order online from their desk/app and execution & finalization contracts of trade takes place elsewhere) Today most brokerages are online and send contract notes from their servers located at their headoffice, and hence according to them the stamp duty has to be as per the state where their headoffice is. Some of them also say that the point of service should be where the trades happen (the exchanges themselves), which is in Mumbai and hence stamp duty should be collected and paid as per the Mumbai Stamp Act. But the thing about lawyers is that they have a vested interest in saying this, if tomorrow a state government sends a notice to the same brokerage, that will be new business for them.
The exchanges say: All the exchanges maintain silence on this except NCDEX, which has put up a short note on how to pay Stamp Duty on their website. NCDEX says that stamp duty has to be paid state-wise as per the clients’ correspondence address proof.
The state governments say: A few states don’t even have a clue on this, but most of them say that if the client has a residential address proof in their state, the stamp duty has to be paid to them. Lately, many of them have started sending out notices to brokerages who are not paying stamp duty of the clients’ who belong to their state. They cannot calculate what is the exact stamp duty due from a brokerage because they don’t get the state-wise turnover data of clients from the exchanges and have to go with what the brokerage declare, at least for now. Check this, a Google search result showing the letters sent by various state governments to the exchanges asking them to inform brokerages to pay stamp duty for all clients from their state.
Ideally its not the place of execution but the place of stamping. So the ECN (electronic contract notes) are stampped at the location where this service of stamping is offered, so logically the stamp duty should be as per what prostocks does. But yes, this is the fodder lawyers live on. So open to litigation as well, but since prostox is not breaking the law per say, its not exposed to any risk till a verdit is pronounced. Anyone who is a lawyer here who can do the honors of a PIL in this regard ?
Can Zerodha spearhead this?
Dear Zerodha Team
When Karnataka had a cap of 50/- earlier, I remember zerodha taking stamp duty of 50 Rs (as per Zerodha office location )for those states in which Zerodha office was not located. Please confirm.
If this is so, then pro stocks is doing same as zerodha and is no different.
thanks