SEBI issues circular on Collection of Stamp Duty on Issue, Transfer and Sale of Units of AIFs

The Securities and Exchange Board of India ( SEBI ) has issued a circular on the collection of stamp duty on the issue, transfer and sale of units of AIFs on account of the Government notification dated January 08, 2020, on “Registrars to an  Issue and/or Share  Transfer  Agents” (RTA) registered under the Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents) Regulations, 1993 as a “depository” for the limited purposes of acting as a “collecting agent” under the Indian Stamp Act, 1899and the Rules made thereunder.

According to this, Alternative Investment Funds, Registrars to an Issue & Share Transfer Agents are directed to comply with the applicable provisions of the Indian Stamp Act, 1899and the Rules made thereunder regarding the collection of stamp duty on sale, transfer, and issue of units of AIFs w.e.f. July 01, 2020.

RTA already appointed by AIFs shall collect the stamp duty on issue, transfer, and sale of units of AIFs. AIFs, where  RTA has not been appointed so far, shall appoint  RTA,  at the earliest, but no later than July 15, 2020, to enable the collection of applicable stamp duty on issue,  transfer, and sale of units of  AIFs in compliance with the applicable provisions of the  Indian  Stamp  Act,  1899 and the  Rules made thereunder. As the provisions of the amended Indian Stamp Act, 1899 and the Rules made thereunder are to be implemented and enforced w.e.f. July 01, 2020, till such time RTA is appointed, as an interim measure, AIFs shall keep the applicable stamp duty on issue, transfer, and sale of units of  AIFs in a  designated bank account.

AIFs shall transfer the said amount to RTA upon appointment for onward remittance to States/Union Territories as per the provisions of the Indian Stamp Act, 1899, and the Rules made under that. As regards transactions (issue, transfer, and sale of units of AIFs in Demat mode)through recognized Stock Exchange or Depository as defined under SCRA, 1956  and Depositories  Act,  1996  respectively, the respective  Stock Exchange/authorized Clearing Corporation or a Depository is already empowered to collect stamp duty as per the amended Indian Stamp Act, 1899 and the Rules made thereunder.