Stamp duty on mutual fund purchases

Effective 1 July 2020, every purchase-side mutual-fund transaction in India carries a flat 0.005% stamp duty. It is deducted from your gross investment amount before the AMC allots units, which is why the number on your contract note can differ very slightly from the round figure you registered with the AMC.

What it applies to

• Lumpsum purchases.
• Every SIP instalment.
• Switch-ins (the "buy" leg of a switch).
• Dividend reinvestments.
• Bonus unit allotments at NAV.

Redemptions, SWP withdrawals and switch-outs are not subject to stamp duty — only the buy side is taxed.

How the maths works

On a ₹50,000 SIP instalment after 1 July 2020:

• Gross amount debited: ₹50,000.00
• Stamp duty (0.005%): ₹2.50
• Amount that becomes units: ₹49,997.50

The AMC then allots units at ₹49,997.50 / NAV-on-allotment-date. You'll often see this appear on the CAS as a row of "₹49,998" rather than the round ₹50,000 you registered — that's the post-stamp-duty net.

Where it shows up

• Consolidated Account Statement (CAS): the "Amount" column is the post-stamp-duty net (some AMCs report gross with a separate stamp-duty line).
• Annual statement: some AMCs aggregate stamp duty for the year as one line item.

Calculator

The MF Tax calculator lets you model the impact of stamp duty across an entire SIP horizon. For a ₹50,000 monthly SIP over 20 years, the cumulative stamp duty is ~₹600 — small in absolute terms, but worth understanding so the CAS numbers make sense.

Source

The stamp duty was introduced via the Finance Act 2019 amendments to the Indian Stamp Act, 1899, with effect from 1 July 2020 (initially scheduled for 1 January 2020 and deferred). All AMCs implement the deduction at unit allotment time.