{"id":11882,"date":"2020-07-04T15:04:52","date_gmt":"2020-07-04T09:34:52","guid":{"rendered":"https:\/\/www.apnaplan.com\/?p=11882"},"modified":"2021-05-24T00:38:53","modified_gmt":"2021-05-23T19:08:53","slug":"stamp-duty-on-mutual-funds","status":"publish","type":"post","link":"https:\/\/www.apnaplan.com\/stamp-duty-on-mutual-funds\/","title":{"rendered":"Stamp Duty on Mutual Funds &#8211; What it means for you?"},"content":{"rendered":"\n<p>Starting July 1, 2020 Stamp duty would be levied on various transactions in Mutual Funds. This post explains the <strong>impact of stamp duty on mutual funds<\/strong> on your investments.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">What is the rule on Stamp Duty on Mutual Funds?<\/h2>\n\n\n\n<p>Stamp duty would be levied on purchase and transfer of mutual fund effective July 1, 2020. <strong>The stamp duty would be 0.005% in case of purchase and 0.015% in case of transfer.<\/strong><\/p>\n\n\n\n<p><strong>Purchase of Mutual Fund can be following scenarios:<\/strong><\/p>\n\n\n\n<ul><li>New investment in <a href=\"https:\/\/www.apnaplan.com\/invest-direct-mutual-funds\/\" class=\"rank-math-link\">Mutual Funds using Direct method <\/a>or through intermediaries<\/li><li>Purchase through SIP (including SIPs which started on a back date)<\/li><li>Switch-in of units<\/li><li>STP (Systematic Transfer Plan)<\/li><li>Dividend reinvestment<\/li><\/ul>\n\n\n\n<p>These type of purchase transactions would attract 0.005% stamp duty. This means Rs 5 for every Rs 1 Lakhs.<\/p>\n\n\n\n<p><strong>Transfer of Mutual Funds can be:<\/strong><\/p>\n\n\n\n<ul><li>Purchase of ETFs or close ended mutual funds through stock exchanges<\/li><li>Transfer of mutual fund units from one demat to another demat account<\/li><\/ul>\n\n\n\n<p>These type of transfer transactions would attract 0.015% stamp duty. This means Rs 15 for every Rs 1 Lakhs.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">How would Stamp Duty on Mutual Funds impact Investment Returns?<\/h2>\n\n\n\n<p>There is <strong>negligible impact for long term investors<\/strong>. However, for people parking money for short term in liquid mutual funds, there would be more impact. You can understand this by following example:<\/p>\n\n\n\n<p>Amount invested: Rs 1 lakh<\/p>\n\n\n\n<p>Expected Annual return in Liquid fund: 6% (~0.017% daily return)<\/p>\n\n\n\n<p>If you park your money for 1 day. You would pay Rs 5 in stamp duty while the return would be Rs 17. So net of stamp duty you make Rs 12 (17 \u2013 5). Earlier you could make Rs 17. <strong>This is almost 30% reduction in returns.<\/strong><\/p>\n\n\n\n<p>But worry not it does not impact most individuals but definitely would have negative impact on some businesses who used to park money in liquid funds for very short term.<\/p>\n\n\n\n<div class=\"wp-block-uagb-inline-notice uagb-inline_notice__outer-wrap uagb-inline_notice__align-left uagb-block-fa20f1ff\"><h4 class=\"uagb-notice-title\"><strong>SIP Vs. Lumpsum \u2013 Which is the Best way to Invest in Mutual Fund?<\/strong><\/h4><div class=\"uagb-notice-text\"><p>There is always a debate on what is the right way to invest in Mutual Funds &#8211; SIP or lumpsum? We give you examples and situations on which of the investment method outperforms. Do read <a href=\"https:\/\/www.apnaplan.com\/sip-vs-lumpsum\/\" class=\"rank-math-link\">SIP Vs. Lumpsum \u2013 Which is the Best way to Invest in Mutual Fund? <\/a><\/p><p>Additionally Read about <a href=\"https:\/\/www.apnaplan.com\/sip-myths-mutual-funds\/\" class=\"rank-math-link\">common myths about SIP investment in Mutual Funds<\/a><\/p><\/div><\/div>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-full is-resized\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/www.apnaplan.com\/wp-content\/uploads\/2020\/07\/Pay-Stamp-Duty-on-Mutual-Funds.jpg\" alt=\"Stamp Duty on Mutual Funds Purchase\" class=\"wp-image-11883\" width=\"768\" height=\"384\" title=\"\" srcset=\"https:\/\/www.apnaplan.com\/wp-content\/uploads\/2020\/07\/Pay-Stamp-Duty-on-Mutual-Funds.jpg 1024w, https:\/\/www.apnaplan.com\/wp-content\/uploads\/2020\/07\/Pay-Stamp-Duty-on-Mutual-Funds-300x150.jpg 300w, https:\/\/www.apnaplan.com\/wp-content\/uploads\/2020\/07\/Pay-Stamp-Duty-on-Mutual-Funds-768x384.jpg 768w\" sizes=\"(max-width: 768px) 100vw, 768px\" \/><figcaption>Stamp Duty on Mutual Funds effective 1st July 2020<\/figcaption><\/figure><\/div>\n\n\n\n<h2 class=\"wp-block-heading\">Stamp Duty on Mutual Funds FAQs<\/h2>\n\n\n<div id=\"rank-math-faq\" class=\"rank-math-block\">\n<div class=\"rank-math-list \">\n<div id=\"faq-question-1593852846606\" class=\"rank-math-list-item\">\n<h3 class=\"rank-math-question \">\u2705How much is the Stamp Duty on Mutual Funds?<\/h3>\n<div class=\"rank-math-answer \">\n\n<p>The stamp duty on purchase of a mutual fund is 0.005%. This means you pay Rs 5 for every Rs 1 lakh invested in Mutual Funds. The stamp duty is 0.015% for transfer. It translates to Rs 15 for Rs 1 lakh investment.<\/p>\n\n<\/div>\n<\/div>\n<div id=\"faq-question-1593852969236\" class=\"rank-math-list-item\">\n<h3 class=\"rank-math-question \">\u2705How to pay stamp duty on mutual funds?<\/h3>\n<div class=\"rank-math-answer \">\n\n<p>The stamp duty will automatically be deducted by the mutual fund\u2019s RTAs (CAMS, KARVY, etc) and paid to the government.<\/p>\n\n<\/div>\n<\/div>\n<div id=\"faq-question-1593853001321\" class=\"rank-math-list-item\">\n<h3 class=\"rank-math-question \">\u2705Is the Stamp Duty on Mutual Funds applicable while selling?<\/h3>\n<div class=\"rank-math-answer \">\n\n<p>No, the stamp duty is applicable while purchasing only. There is NO stamp duty while selling the funds.<\/p>\n\n<\/div>\n<\/div>\n<div id=\"faq-question-1593853003628\" class=\"rank-math-list-item\">\n<h3 class=\"rank-math-question \">\u2705Does it impact my existing Mutual fund investments (invested before July 1, 2020)?<\/h3>\n<div class=\"rank-math-answer \">\n\n<p>No, the mutual funds invested before July 1, 2020 are not impacted in anyway.<\/p>\n\n<\/div>\n<\/div>\n<div id=\"faq-question-1593853004744\" class=\"rank-math-list-item\">\n<h3 class=\"rank-math-question \">\u2705Is the stamp duty applicable for SIP (Systematic Investment Plan)?<\/h3>\n<div class=\"rank-math-answer \">\n\n<p>Yes, stamp duty for Mutual funds is applicable for any type of purchase \u2013 <a href=\"https:\/\/www.apnaplan.com\/sip-vs-lumpsum\/\" class=\"rank-math-link\">SIP or lumpsum<\/a>.<\/p>\n\n<\/div>\n<\/div>\n<div id=\"faq-question-1593853005531\" class=\"rank-math-list-item\">\n<h3 class=\"rank-math-question \">\u2705What happens if the SIP started before July 1, 2020?<\/h3>\n<div class=\"rank-math-answer \">\n\n<p>All SIP instalments are considered fresh purchase. So, for all future SIP instalments Stamp duty would be applicable.<\/p>\n\n<\/div>\n<\/div>\n<div id=\"faq-question-1593853006251\" class=\"rank-math-list-item\">\n<h3 class=\"rank-math-question \">\u2705Is the stamp duty applicable for STP (Systematic Transfer Plan)?<\/h3>\n<div class=\"rank-math-answer \">\n\n<p>STP means you first invest in a Low risk Debt mutual fund and then transfer the money from this fund to another riskier fund like equity or balanced fund. So technically when you invest in first fund, it\u2019s a purchase and hence stamp duty would be applicable. At the time of STP, the earlier unit is sold and new unit is purchased in Second Fund. Since it\u2019s a purchase, stamp duty would be levied again.<\/p>\n\n<\/div>\n<\/div>\n<div id=\"faq-question-1593853079826\" class=\"rank-math-list-item\">\n<h3 class=\"rank-math-question \">\u2705What happens to Stamp Duty in case of Mutual Fund Switch?<\/h3>\n<div class=\"rank-math-answer \">\n\n<p>Switch means selling in one fund and buying another. So, in this case stamp duty would be levied while buying the mutual fund unit. So yes, Switch would lead to levy of stamp duty.<\/p>\n\n<\/div>\n<\/div>\n<div id=\"faq-question-1593853080657\" class=\"rank-math-list-item\">\n<h3 class=\"rank-math-question \">\u2705Would Stamp Duty be levied in case of Mutual Fund Dividend reinvestment?<\/h3>\n<div class=\"rank-math-answer \">\n\n<p>Dividend Reinvestment is purchase of fresh units using the dividend paid. Hence stamp duty would be charged for dividend reinvestment.<\/p>\n\n<\/div>\n<\/div>\n<div id=\"faq-question-1593853136399\" class=\"rank-math-list-item\">\n<h3 class=\"rank-math-question \">\u2705Is stamp duty on Mutual fund levied if the purchase is <a href=\"https:\/\/www.apnaplan.com\/invest-direct-mutual-funds\/\" class=\"rank-math-link\">Direct<\/a>?<\/h3>\n<div class=\"rank-math-answer \">\n\n<p>The stamp duty is levied on purchase of mutual fund irrespective of mode of purchase. So it does not matter if the mutual fund is purchased directly through AMC website or through agent, stamp duty of 0.0005% would be levied.<\/p>\n\n<\/div>\n<\/div>\n<div id=\"faq-question-1593853137977\" class=\"rank-math-list-item\">\n<h3 class=\"rank-math-question \">\u2705What is impact of Stamp Duty on Mutual Funds on my investment returns?<\/h3>\n<div class=\"rank-math-answer \">\n\n<p>The stamp duty is 0.0005% of the purchase amount. For investment of Rs 1 Lakh you would pay Rs 5 as stamp duty. So, money invested would be Rs 99,995. This is hardly any impact on your returns.<br \/>However people or businesses who park money for 1 &#8211; 2 days in liquid funds may see returns reduce by more than 30%.<\/p>\n\n<\/div>\n<\/div>\n<div id=\"faq-question-1593853138719\" class=\"rank-math-list-item\">\n<h3 class=\"rank-math-question \">\u2705Is the Stamp duty applicable for all mutual funds?<\/h3>\n<div class=\"rank-math-answer \">\n\n<p>Stamp duty is applicable for all <a href=\"https:\/\/www.amfiindia.com\/\" target=\"_blank\" aria-label=\"mutual funds (opens in a new tab)\" rel=\"noreferrer noopener\" class=\"rank-math-link\">mutual funds<\/a> including debt fund, international funds, Equity fund, international fund, etc.<\/p>\n\n<\/div>\n<\/div>\n<div id=\"faq-question-1593853139529\" class=\"rank-math-list-item\">\n<h3 class=\"rank-math-question \">\u2705What is stamp duty if I buy Mutual Funds on Stock Exchange?<\/h3>\n<div class=\"rank-math-answer \">\n\n<p>If you buy closed ended funds or ETFs on stock exchange, it&#8217;s considered a transfer from seller to purchaser. In this case the applicable stamp duty rate be of 0.015%<\/p>\n\n<\/div>\n<\/div>\n<\/div>\n<\/div>","protected":false},"excerpt":{"rendered":"<p>Effective July 1, 2020 you need to pay stamp duty of 0.005% on purchase of Mutual funds. In case of transfer like while purchasing ETFs\/closed ended funds from stock exchange, the rate is 0.015%<\/p>\n","protected":false},"author":1,"featured_media":11883,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_uag_custom_page_level_css":"","site-sidebar-layout":"default","site-content-layout":"default","ast-site-content-layout":"","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"default","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"footnotes":""},"categories":[4],"tags":[],"uagb_featured_image_src":{"full":["https:\/\/www.apnaplan.com\/wp-content\/uploads\/2020\/07\/Pay-Stamp-Duty-on-Mutual-Funds.jpg",1024,512,false],"thumbnail":["https:\/\/www.apnaplan.com\/wp-content\/uploads\/2020\/07\/Pay-Stamp-Duty-on-Mutual-Funds-150x150.jpg",150,150,true],"medium":["https:\/\/www.apnaplan.com\/wp-content\/uploads\/2020\/07\/Pay-Stamp-Duty-on-Mutual-Funds-300x150.jpg",300,150,true],"medium_large":["https:\/\/www.apnaplan.com\/wp-content\/uploads\/2020\/07\/Pay-Stamp-Duty-on-Mutual-Funds-768x384.jpg",768,384,true],"large":["https:\/\/www.apnaplan.com\/wp-content\/uploads\/2020\/07\/Pay-Stamp-Duty-on-Mutual-Funds.jpg",1024,512,false],"1536x1536":["https:\/\/www.apnaplan.com\/wp-content\/uploads\/2020\/07\/Pay-Stamp-Duty-on-Mutual-Funds.jpg",1024,512,false],"2048x2048":["https:\/\/www.apnaplan.com\/wp-content\/uploads\/2020\/07\/Pay-Stamp-Duty-on-Mutual-Funds.jpg",1024,512,false],"yarpp-thumbnail":["https:\/\/www.apnaplan.com\/wp-content\/uploads\/2020\/07\/Pay-Stamp-Duty-on-Mutual-Funds-120x120.jpg",120,120,true]},"uagb_author_info":{"display_name":"Amit","author_link":"https:\/\/www.apnaplan.com\/author\/admin\/"},"uagb_comment_info":3,"uagb_excerpt":"Effective July 1, 2020 you need to pay stamp duty of 0.005% on purchase of Mutual funds. In case of transfer like while purchasing ETFs\/closed ended funds from stock exchange, the rate is 0.015%","_links":{"self":[{"href":"https:\/\/www.apnaplan.com\/wp-json\/wp\/v2\/posts\/11882"}],"collection":[{"href":"https:\/\/www.apnaplan.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.apnaplan.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.apnaplan.com\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.apnaplan.com\/wp-json\/wp\/v2\/comments?post=11882"}],"version-history":[{"count":0,"href":"https:\/\/www.apnaplan.com\/wp-json\/wp\/v2\/posts\/11882\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.apnaplan.com\/wp-json\/wp\/v2\/media\/11883"}],"wp:attachment":[{"href":"https:\/\/www.apnaplan.com\/wp-json\/wp\/v2\/media?parent=11882"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.apnaplan.com\/wp-json\/wp\/v2\/categories?post=11882"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.apnaplan.com\/wp-json\/wp\/v2\/tags?post=11882"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}