Buying a property is both a ‘financial and emotional’ achievement for most of us. Mere possession of the property is not enough. Legal evidence of ownership is required. As a result, we end up paying a certain amount, called the Stamp Duty, at the time of registration. Like Income Tax, Stamp Duty is also a government tax, but is levied on property transactions. The payment of Stamp Duty is governed by the Indian Stamp Act, 1899 (hereinafter, referred to as ‘the Act’). This must be paid in full and on time, failure of which attracts a penalty.
Change in Act
Finance Act is an annual Act which seeks to amend certain provisions of the principal Acts at the beginning of the Financial Year (FY). The Indian Stamp Act witnessed Amendments via the provisions of Part I, Chapter IV of the Finance Act 2019. The date of implementation deferred twice before it was finally rescheduled to July 1, 2020. This decision was mentioned in the Notification from the Ministry of Finance via the Gazette of India, on March 30, 2020.
Amendments in Indian Stamp Act, 1899 brought through Finance Act 2019 and Rules made thereunder will come into effect from tomorrow, i.e. 1st July, 2020 vide notifications dated 30th March, 2020.
— Ministry of Finance (@FinMinIndia) June 30, 2020
Notable changes made in Act are as follows:-
- Consolidation of Stamp Duty Guidelines across the country: Earlier, different rates of Stamp Duty were followed by each state. Now, it has been made uniform throughout the country;
- Stamp Duty on ‘off-market’ transactions: Initially, Stamp Duty was not imposed on the purchase and sale of Unlisted Shares, Gifts of financial securities and other such ‘off-market’ transactions in Demat mode. The responsible parties saw that as a loophole to evade the Stamp Duty, but this lacuna has been tended to with this Amendment.
- Removal of ‘double imposition’: Earlier, both the Buyer and the Seller were required to pay the Stamp Duty. Now, only ONE PARTY, i.e., the Buyer, has to bear the responsibility to pay the same;
- Stamp Duty on Stock Exchange based transactions: Stock Exchanges, Clearing Corporations and Depositories have reduced the burden on brokers by taking upon the responsibility of collecting and paying the Stamp Duty to the Central Government, which will then be distributed to the various states;
- Collection of Stamp Duty: It is now clear that the Stamp Duty will be payable to the state in which the Client and specifically the Buyer, in a transaction is located.
- Revision of Rates: The new rates for various types of financial instruments will be as follows –
|Rate of Stamp Duty|
Issuance of debenture
Transfer or re-issuance of debentures
|Issue of security other than debenture||
|Transfer of security other than debenture on delivery basis||
Transfer of security other than debenture on non-delivery basis
Futures derivates (equity and commodity)
Currency and interest rate derivatives
Repo on corporate bonds
Need for Amendment
As per the Statement issued by the Ministry of Finance, the Amendment was necessary to
- Bring about a ‘rationalized and harmonized’ system;
- Implement a centralized collection mechanism;
- Minimize the cost of collection;
- Enhance revenue productivity;
- Maintain uniformity in stock markets across the country.
The Ministry of Finance had also clarified that there is no change in the Financial Year.
The public is receptive to the Mutual Fund Investments is subject to Stamp Duty.
- Amit Jain, co-founder and Chief Executive Officer of Ashika Wealth Advisors, went on to say that “levy of stamp duty will hardly impact mutual fund investors as it is too low to have any significance;”
Finally, uniform stamp duty from tomorrow. Most of the country benefits as trading cost lowers (TN benefits most). Around 4 states who had a max cap of stamp per contract note will not (HFT firms & prop shops based in these states will be worst affected). https://t.co/tpYxsi3sTY
— Nithin Kamath (@Nithin0dha) June 30, 2020
Thread on Stamp Duty on Mutual Funds
From today i.e. 1st July20, Stamp Duty will be applicable on MFs
This thread will answer Qs on impact of this on ur 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
— Nagpal Manoj (@NagpalManoj) July 1, 2020
- Vidya Bala, the co-founder of Primeinvestor, had told that there would be either no or low impact on retail investors unless they invest crores of rupees for less than three months. Corporate investors might experience some impact on their colossal investment in certain categories such as overnight funds and so on;
— Vidya Bala (@bala_vidya) June 30, 2020
— PrimeInvestor (@primeinvestorin) June 30, 2020
- Omkeshwar Singh, Head RankMF at Samco Securities, emphasized that the impact will depend on the ‘holding period’ and a long-term investor will have minimal impact;
— Omkeshwar Singh (@Omkeshwarsingh) July 1, 2020
- Jimmy Patel, CEO of Quantum Mutual Fund, stated that the stamp duty charge would have an impact on investors investing in mutual funds. It is because, now, the investors will be allotted units AFTER deducting the stamp duty;
As a whole, the changes introduced through the Amendment should undoubtedly contribute to the smooth functioning of the Indian stock markets and in turn, the economy.
How SEBI’s New Margin Rule Is Affecting Retail Traders?
Securities and Exchange Board of India has introduced new margin rules for traders. Traders and Brokers are not happy with the new regulations because they will have to invest a large amount of cash in fulfilling margin requirements for trade.
SEBI had introduced the new margin rule in the year 2020 for intraday traders. It is being implemented in a phased manner. Traders were supposed to maintain 25 per cent of the peak margin in the first phase; the margin was raised by 50 per cent in the second phase. In the third phase, as per the new margin rule, intraday traders will have to pay a 100 per cent upfront margin. According to new norms, the margin requirements will be calculated four times during every trading session because the money margin must be greater than the need.
As per the new rule, brokers must collect margin from investors for any purchase or sale, and if they fail to do so, they will have to pay the penalty. Thus, brokers will not receive power of attorney. Brokers cannot use power of attorney for pledging anymore.
Those investors who want to make use of margin will have to create margin pledges separately. As per the new rule, investors will have to pay at least a 30 per cent margin upfront to avail a margin loan. Shares brought today cannot be sold tomorrow. Funds from shares sold today cannot be used for new trades on the same day.
The market experts said that there must be proper adjustments for implementing new rules, or it may create chaos, trouble and disturbance to the market participants. The CEO and founder of Zerodha broking firm, Nithin Kamath tweeted that, “the day when the new rules came into effect was the dreaded day for brokers, exchanges, intraday traders”.
Traders Are Not Happy:
Changes in rules have evoked strong reactions from traders because they will have to invest a large amount of cash in fulfilling margin requirements for trades as per new margin rules. Even the trading in futures and options will become more expensive. Traders are disappointed because they will have to pay up more money to bet in stock markets. As per new margin rules, Traders are also liable for the penalty if the rules are not followed during the trading session. If a trader wants to buy Nifty worth Rs 10 lakh, he will have to pay a 20 per cent margin of around 2 lakh. If the margin of the trader does not meet the need, he will be penalized. Traders will have to pay the minimum amount for opening the Multilateral Trading facility account, and they have to maintain a minor balance at all times.
Why Gas SEBI Introduced A New Margin Rule?
SEBI has introduced new rules to protect retail investors from purchasing difficulty. The intended goal of SEBI behind new margin rules is to bring down the difficult market situation and avoid huge fluctuation in stock markets during extreme stress. The new margin rules are likely to bring transparency to the market; it is expected to strengthen the market’s safety.
Maya Global Education Society Acquires GIAP Journals
Gyandhara International Academic Publications (GIAP Journals), headquarter at Mira Road, Thane, Maharashtra, has been completely acquired by Maya Global Education Society (MGES), Prayagraj, India, with effect from 25th August 2021. Maya Global Education Society is an emerging confluence of academicians to cater to challenges in the educational and research domain in the post-pandemic world. Its headquarter is at Prayagraj, India.
According to our trusted sources value of this acquisition is around 50,000 USD. MGES claimed that their core activity is developing an online research-based education and training system that will reach all parts of the society irrespective of their economic status.
MGES aims to delve into the following activities:
* Training to academicians on tools and systems to improve students’ engagement in an online environment.
* Training to early researchers on research tools, software, and methodology.
* Training to early professionals and graduates to meet the skills demand of Industrial Revolution 4.0 (based on World Economic Forum suggestions).
* Publication of open access research journals and books (Recently acquired GIAP Journals).
* Distribution of scholarly content to Universities and higher education institutions.
GIAP cofounder and CEO Mrs. Rajni told us in an exclusive interview that the journey of GIAP was like a dream come true. It started in 2012 with loans on personal jewelry. After serving in the academic fraternity for the last 9 years, it was a timely decision for all journals and books to grow under the able guidance of pure academicians and researchers.
Kitex’s Stock Surged 46% In A Week Post Tussle With Kerala Government
The stock of Kitex Garments, the world’s second-largest manufacturer of kids’ garments, based in Kerala, saw a secular uptrend recently, after the company’s announcement that it will relocate to Telangana following a squabble with the Kerala government. The group withdrew a 3,500-crore investment project from Kerala and is planning to move to Telangana with a 1000 crore worth investment project.
Sabu M Jacob, the chairperson and managing director of the Kitex Group, stated his morality forbids him from ever investing a single rupee in Kerala, his native state. The comment brings the confrontation between the Kerala government and the homegrown firm to a close.
What is at the root of the clash?
Kitex has been subjected to repeated inspections by various Kerala government authorities in recent weeks, with group chairperson Sabu Jacob publicly accusing Pinarayi Vijayan’s Left administration of hounding the firm.
The inspections, Jacob said, were intended to “harass” businesses like him and “push him into a corner.” The authorities who came down to examine the firm, he claimed, seemed as though they were on the lookout for thieves and criminals.
P Rajeev, the state’s Industries Minister, emphasized that the government had not conducted any Suo Motu inspections of the firm. While the industries department did not conduct any searches, he said the health and labour agencies did so in response to orders from the Kerala High Court and the National Human Rights Commission based on individual complaints. The accusations are allegedly related to the company’s treatment of employees and the contamination of a nearby river due to wastewater discharge.
A Congress MP and a Congress MLA, and a female employee filed charges against the organization. The charges ranged from polluting a local waterway to harassing employees and violating minimum wage laws.
The Kerala government has denied targeting Kitex on purpose. The inspections were carried out in response to complaints and directives from courts and the state’s human rights commission; according to state industries minister P. Rajeev, he said his government stands for “responsible investment”, and the state would be a hub for such investments in a few years. He added, “The LDF Govt. ensures that sustainable and innovative industries thrive here,”
Thank you @hvgoenka for allaying the apprehensions over Kerala's EoDB. Your honesty is much appreciated. Kerala has been one of the most investor friendly States in India and will continue to be so. The LDF Govt. ensures that sustainable and innovative industries thrive here. https://t.co/6zQO0AUFIG
— Pinarayi Vijayan (@vijayanpinarayi) July 4, 2021
What was the aftermath of the inspections?
Even though the final findings of the official inspections are still pending, Jacob escalated his feud with the government by announcing that he was cancelling investments worth Rs 3,500 crores that were announced during the ASCEND conference in January 2020. By 2025, the investments were intended at establishing an apparel park and industrial parks along the proposed economic corridor in Kochi, Thiruvananthapuram, and Palakkad, resulting in the creation of thousands of employment opportunities.
Without identifying anyone in the state administration, Jacob said that the state lacked a business-friendly environment. While he did not want to relinquish the intended investments in Kerala, he said he was compelled to do so due to political and bureaucratic persecution. He said that although other states in the country were gradually improving their economic environment, Kerala was still 50 years behind.
Jacob and a few Kitex officials went to Hyderabad last week on a private plane supplied by the Telangana government, where they met with a team led by the state’s Industries Minister, KT Rama Rao. The business revealed intentions to spend Rs 1,000 crore in an apparel park at the Kakatiya Mega Textile Park in Warangal after two days of negotiations.
The political consequences of the experiment
Jacob, the founder of the Kitex Group, is an industrialist who has also dabbled in politics. Jacob launched Twenty 20, a one-of-a-kind political experiment that won seats in panchayat elections in 2015 and then built on that success in the 2020 elections by winning seats in new panchayats.
This corporate-driven panchayat model has resulted in a lot of growth in tiny villages, putting both the Congress and the Communist Party of India in danger (Marxist).
Kerala’s rating in terms of ease of doing business
Kerala ranks worse than many other states and union territories when it comes to the ease of doing business. Based on improvements that states were asked to adopt in 2019, it was placed 28th out of 36 states and UTs in the ease of doing business rankings.
Kerala was judged to have failed to implement some labour reforms, such as single-window clearance and measures to ensure simple information flow and transparency.
Following the Kitex withdrawal, however, several groups that had thrived in the state for years came out openly in favour of the state administration.
RPG Enterprise’s chairperson Harsh Goenka publicly tweeted in support of the administration. He stated, “We are the largest employers in Kerala. We find the local government very supportive,”
We are the largest employers in Kerala. We find the local government very supportive.
— Harsh Goenka (@hvgoenka) July 1, 2021
Where does the company stand in the share market?
With the decision to invest in Telangana, Kitex’s shares were once again trapped in the upper circuit. On Wednesday, the stock soared almost 10%, reaching a record high of Rs 204.05.
Within a week, the stock price of the children’s clothing company rose by almost 85 percent. The stock price increased from Rs 110.05 to Rs 204.05, reaching its highest level in three years. The company’s market capitalization increased to Rs 1,357 crore from Rs 732 crore as a result of this.
Because it controls 55 percent of the firm, the promoter entity, which includes Kitex Managing Director Sabu Jacob, profited Rs 347 crore. Sabu Jacob’s entire share value increased to Rs 754 crore.
Meanwhile, the BSE pressed Kitex for an explanation for the sharp increase in share prices, which the firm attributed to a Rs 1,000 crore investment plan in Telangana.
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