Stamp Duty on Shares: The Uniform Rates and Why Only the Buyer Pays
Stamp duty is the smallest line on a contract note and the only one that was, until recently, genuinely chaotic. Before July 2020 the rate depended on which state you lived in, duty could be collected twice on a single transaction, and brokers maintained state-wise rate tables to work out what to charge whom.
The Finance Act, 2019 amended the Indian Stamp Act to fix this, with effect from 1 July 2020. The result is one rate per instrument, collected at one point, for the whole country. This chapter covers what those rates are and the one structural feature that distinguishes stamp duty from every other charge you pay.
The feature that makes it different
Stamp duty is paid by the buyer only.
This is worth stating first because it is the opposite of how most people assume trading costs work, and it differs from STT specifically.
Securities Transaction Tax on a delivery trade is charged on both legs — the buyer pays on purchase and the seller pays on sale. Stamp duty on the same trade is charged once, on the buy side. The seller pays nothing.
The logic comes from what stamp duty historically was: a charge on executing an instrument of transfer. The person acquiring the right pays to have the transfer stamped. When the mechanism was modernised and moved into the exchange’s clearing system, that principle was retained even though no physical instrument is stamped any more.
The practical consequence is that your cost of entering a position includes stamp duty and your cost of exiting it does not.
The rates
These rates are uniform across all states and union territories under Schedule I of the Indian Stamp Act as amended. They apply to transactions through a recognised stock exchange or depository.
| Instrument | Rate | Charged on |
|---|---|---|
| Equity, delivery-based transfer | 0.015% | Buyer |
| Equity, non-delivery (intraday) | 0.003% | Buyer |
| Futures (equity and commodity) | 0.002% | Buyer |
| Options (equity and commodity) | 0.003% | Buyer |
| Currency and interest rate derivatives | 0.0001% | Buyer |
| Debentures | 0.005% | Buyer |
| Government securities | Nil | — |
| Repo on corporate bonds | 0.00001% | Buyer |
Rates are stated per transaction value. On a ₹1,00,000 delivery purchase, stamp duty is ₹15. On the same value traded intraday, ₹3.
The figures are set by statute rather than by the exchange, so they do not vary by broker, by segment volume, or by account type. A broker quoting a different stamp duty rate is either including something else in the line or is wrong.
Who collects it
The 2019 amendment changed not just the rates but the collection architecture, and this is the part that eliminated the double-charging problem.
Duty is now collected by one of three authorised collecting agents:
- The stock exchange or its clearing corporation, for transactions executed on an exchange
- The depository — NSDL or CDSL — for off-market transfers and for transactions not routed through a clearing corporation
- The registrar and transfer agent, for certain issues of securities
The collecting agent remits the duty to the central government, which then distributes it to the state of the buyer’s domicile. The buyer’s state still receives the revenue; it simply no longer sets the rate or handles the collection.
Before this, both the buyer’s state and the seller’s state could claim duty on the same transfer, and participants in different states paid different amounts for identical trades. Neither is now possible.
Off-market transfers
A transfer that does not go through an exchange still attracts stamp duty, collected by the depository when the instruction is processed. This covers:
- Transfers between two demat accounts belonging to different people
- Gifts of shares
- Transfers pursuant to a private arrangement
Two cases are treated differently:
Transfers between your own demat accounts are not transfers of beneficial ownership, so no duty arises.
Transmission — the passing of securities to a nominee or legal heir on the death of the holder — is not a transfer by act of parties and does not attract stamp duty. The depository processes transmission on documentation rather than on a stamped instruction.
Note the contrast with STT here: an off-market transfer attracts stamp duty but not STT, because STT requires an exchange transaction while stamp duty follows the transfer itself. The two charges have different triggers and it is possible to incur one without the other.
Stamp duty on new issues
A company issuing shares pays stamp duty on the issue, distinct from the duty a buyer pays on a secondary market purchase. For an IPO, allotment to successful applicants attracts duty at the issue stage, collected through the registrar.
For a rights issue, the same applies to the shares allotted on exercise. For a bonus issue, no fresh consideration passes and the treatment follows the capitalisation rather than a transfer — our bonus issue versus stock split page covers why a bonus is structurally not a purchase.
How it sits against your other costs
Putting the statutory charges on a ₹1,00,000 delivery purchase side by side, to see the relative scale:
| Charge | Amount | Who pays | Deductible against capital gains? |
|---|---|---|---|
| Stamp duty (0.015%) | ₹15 | Buyer only | Yes — part of cost of acquisition |
| STT (0.1%) | ₹100 | Both legs | No |
| Exchange transaction charges | Varies by exchange | Both legs | Yes |
| GST on brokerage and charges | 18% of those | Both legs | Yes |
| SEBI turnover fees | Nominal | Both legs | Yes |
That last column is the one worth noticing. Stamp duty, being incurred on acquisition, forms part of your cost of acquisition and therefore reduces your capital gain when you eventually sell. STT does not — it is specifically excluded for taxpayers assessed under capital gains, as covered in our LTCG guide.
So the smaller charge is deductible and the larger one is not. On a ₹1,00,000 trade the difference is immaterial; across a portfolio built over years it is a real, if modest, asymmetry in favour of recording your stamp duty properly.
The honest summary
Stamp duty is a statutory charge on acquiring securities, at 0.015% for delivery-based equity and lower rates for everything else, uniform across India since July 2020, collected by the exchange or depository and paid by the buyer alone.
Three things distinguish it from the charges around it. Only the buyer pays, so exits are duty-free. It attaches to the transfer rather than to an exchange trade, so off-market transfers and gifts attract it while transmission to an heir does not. And unlike STT, it is part of your cost of acquisition and therefore reduces your eventual capital gain.
Rates are set by statute and have been stable since the 2020 reform, but statutory rates do get amended. Verify the current schedule before relying on a figure for a large transaction.
Related reading
- Securities Transaction Tax — the larger charge on the same contract note, and the one you cannot deduct.
- LTCG tax on shares — where cost of acquisition is computed, and why stamp duty belongs in it.
- Rights issue — duty on shares allotted on exercise.
- Stock market terminology — the rest of the contract note.