Mutual fund stamp duty: 0.005% on purchases, in rupees

A small charge, on the way in

Since 1 July 2020, buying mutual fund units attracts stamp duty of 0.005% of the amount. It is collected by the fund house on behalf of the state and deducted from your payment before units are allotted.

The rupee amounts are tiny:

A ₹10,000 SIP for 10 years is 120 instalments, so the duty adds up to ₹60 over the decade.

Where you see it

Your account statement shows the duty on each purchase line, usually as a separate "stamp duty" figure beside the amount, with units allotted on the net amount. If the SIP is ₹10,000 and the statement shows ₹9,999.50 invested, that is the duty at work. The same line appears for SIP instalments and for switches into a scheme; redemptions show none.

Put beside the costs that matter

Stamp duty is a one-time 0.005%. The expense ratio is charged every year. A 1% expense ratio on ₹10 lakh is ₹10,000 a year, which is 200 times the one-time duty on the same ₹10 lakh. The cost to watch in a fund is the recurring one, a point worked out in rupees in the direct vs regular cost in lakhs.

So the duty is no reason to skip a purchase or to batch SIPs into fewer, larger ones. It is worth knowing about only so that the small gap between the amount debited and the amount invested does not look like an error.

A quick check

If a statement line looks off, compare three numbers: the amount debited, the stamp duty, and the units allotted at that day's NAV. Units × NAV should equal the debited amount minus the duty. Our post on what NAV is and when you get it explains which day's NAV applies.

This post is educational, not financial advice. Duty rates are set by law and can change; the fund house's statement is the final record of what was charged.