Stamp Duty on Shares: What You Need to Know in India

When you buy or sell shares in India, stamp duty on shares, a state-level tax on legal documents including share transfers. Also known as securities transaction stamp duty, it’s not a fee you pay to the stock exchange—it’s a legal charge applied when ownership changes hands. This tax applies whether you trade through a broker, buy directly from another investor, or receive shares as a gift. It’s collected by the state where the buyer resides, not where the company is registered.

Stamp duty on shares is separate from Securities Transaction Tax (STT), a central government tax on every trade executed on Indian stock exchanges. STT is automatic and shown on your trade confirmation. Stamp duty is added on top of it, and you might not even notice it unless you check your contract note. Rates vary by state—Mumbai buyers pay 0.015% on delivery trades, while Delhi charges 0.003%. Some states, like Gujarat, have higher rates for off-market transfers. The central government sets the base rate, but states can adjust it within limits.

Stamp duty also applies to demat transfers, the process of moving shares electronically between accounts. Even if you’re just moving shares from one broker to another, or gifting them to a family member, the tax kicks in. The buyer pays it, but brokers usually collect it upfront and remit it to the state. If you’re trading frequently, this adds up. A ₹5 lakh trade in Maharashtra means ₹75 in stamp duty—small per trade, but ₹1,500 a month if you trade 20 times.

There’s no stamp duty on intraday trades or futures and options. That’s because no actual shares change hands—you’re just speculating on price. But if you hold a futures contract until expiry and take delivery, then yes, stamp duty applies. The same goes for bonus shares or rights issues—those are treated like new purchases and taxed accordingly.

What’s changing in 2025? The government is pushing for uniform stamp duty across states to reduce confusion. A new centralized collection system is being tested, where the tax is collected by the depository (NSDL or CDSL) instead of state authorities. This means fewer errors, faster processing, and no more surprise bills from different states. But until it’s fully rolled out, you still need to know your state’s rate.

Don’t assume your broker handles everything perfectly. Some small brokers still forget to charge stamp duty on off-market transfers. If you’re buying shares from a friend or through a private sale, you’re legally responsible. Keep your contract notes. If the tax is missing, you could face penalties later.

Stamp duty on shares isn’t just a cost—it’s part of your total trading expense, just like brokerage or GST. Ignoring it can make your returns look better than they are. Whether you’re a first-time buyer or someone who trades weekly, knowing how this tax works helps you plan better. Below, you’ll find real examples from Indian investors on how stamp duty affects their portfolio, what states charge the most, and how to spot hidden charges on your statements.