From a capital markets perspective, the Union Budget 2019-20 did not have much to offer except the announcement related to the manner in which stamp duty would be levied on securities transactions.

While presenting the Budget, Union Minister Piyush Goyal said stamp duty would be levied at a single point through the stock exchange mechanism and thereafter it would be shared with the particular State based on the buyer’s domicile. “Our government had promised last year that we will carry out reforms in stamp duty levied and collected on financial securities transactions,” said Mr. Goyal.

Incidentally, capital market participants have, for long, been demanding a review of the levy of stamp duty on stock exchange transactions though the demand was always for abolition of the duty, especially since securities transaction tax (STT) is levied on all such transactions.

Crucial step

Sanjit Prasad, chief executive officer, Indian Commodity Exchange (ICEX), said: “The single charge at point of first transaction is a very important step in the right direction. It will not only help in simplicity of compliance but also in bringing down the overall transaction cost.”

In a similar context, Kunal Sanghavi, Chief Financial Officer, Metropolitan Stock Exchange of India (MSEI), said the announcement has brought a lot of comfort, not only in terms of bringing down the cascading effect of the duty but also in terms of ease of compliance.

“While we await details in the fine print, this will probably end the ambiguity among the broking community wherein inconsistent practices were followed in terms of which State rates were to be applied and where the duty needs to be deposited,” said Mr. Sanghavi.