Why Stamp Duty on Intraday Trading Is Unjustified and Should Be Abolished!

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Intraday trading or day trading as the term suggests refers to single day trading where a trader has to buy and sell or sell and buy their shares within the same trading day.

A viable means of profit, day trading is done by both, the institutional traders as well as individual traders. It is their active trading that keeps the market efficient as well as liquid.

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Stock Trading (Intraday and Delivery Trading) Is Done In a Dematerialized Form

Gone are the days when Shares were available in physical form. Today, Securities and Exchange Board of India (SEBI) has made it compulsory for everyone to own shares and securities in the dematerialized form, i.e. the non-physical form. Physical shares have almost become obsolete and Stock Trading has become absolutely paperless.

Paper less trading automatically indicates that one doesn’t have to pay Stamp Duty as the shares and securities are stored electronically. In fact, this fact becomes one of the prime and biggest advantages of a Demat Account i.e. one doesn’t have to pay “Stamp Duty”. However, even today, the investors as well as the day traders pay Stamp Duty though they are trading electronically which is totally paper less. Shocked? Well, that’s the ground reality!

Here, we share The Breakup Of the Taxes Paid by an Intraday Trader as per SEBI

Apart from brokerage + Service Tax (@14.00%), A TRADER HAS TO PAY THE FOLLOWING Government Levies for stock intraday and currency future here as under:

For Stock

  • STT (Securities Transaction Tax) @ Rs. 25 per Lakh (only on Sell)
  • Exchange Transaction Charges
  • SEBI Charges
  • Stamp Duty Charges (@0.002% on Buy amount + 0.002% on Sell Amount)
  • Swachh Bharat Cess Tax

Intraday Currency Future

  • Service Tax (@14.00%)
  • Exchange Transaction Charges
  • SEBI Charges
  • Stamp Duty Charges
  • Swachh Bharat Cess Tax

Stamp Duty – An Illegal Gain to the Government

In Intraday trading, when day traders are buying and selling shares within the same day, the stocks are not actually transferred to their account. This is the reason why the day traders have to mandatorily square-off their position before the market closes on that day. Moreover, the trading is in electronic form and completely paper less. In such circumstances, don’t you think that the Stamp Duty charged by the Government (0.002% on Buy amount + 0.002% on Sell Amount for Intraday) is justified?

When there is no paper, why should one pay for a stamp that doesn’t exists at all? The Stamp Duty Tax on an invisible and imaginary paper is totally unjustified and this is the reason it should be abolished at the earliest. Both, SEBI and Government cannot fool the traders and gain illicit profits from the traders’ hard earned money.

Abolishing Stamp Duty Tax Will Benefit the Traders and Automatically Government & SEBI Will Be benefitted Too

In 2014, ahead of the Summer Budget CEO of London Stock Exchange (LSE) Group called on the UK government to eradicate stamp duty on Listed Shares to encourage investments.  This is the same period when Stamp Duty was abolished on AIM (Alternative Investment Market), a sub-market of the London Stock Exchange. Interestingly, an immediate positive impact was seen in the investments. (Source)

Likewise, if the Indian government abolishes this unjustified “Stamp Duty Tax” on Intraday Trading as well as Trading in general, traders will be benefitted and it will encourage more trading. More trading means more direct investments as well as taxes to the Government. No wonder, the trader is paying other taxes to the government which ultimately benefits the Indian economy.

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About RN Verma 12 Articles
The author is an Intraday trader from Monday to Friday, and you can find him betting horses on every Saturday and Sunday at Mahalaxmi Race Course, Mumbai. Professionally, he is a graduate Civil Engineer (B.Tech from Benaras Hindu University) with expertise knowledge of estimating, tendering, and quantity surveying. He has also worked for many government (centre and state) and private organizations in the past.