The Maharashtra government has decided to impose stamp duty on proprietary trades, leading to concerns among stock brokers.

The state government has informed stock exchanges that all transactions, including proprietary trades, will be covered under the Bombay Stamp Act. The move is likely to affect brokers actively involved in jobbing and arbitrage done in their own accounts, according to market sources.

The government has issued a circular to exchanges asking them to pay stamp duty on proprietary trades and arbitrage transactions.

“The government move will affect stock brokers as it will add to the transaction cost. There should be uniformity in the stamp duty structure. It's not logical to have differential rates for different states,” said a broker on condition of anonymity.

At present, the government charges a stamp duty of Rs 10 per Rs 1 lakh worth of turnover for deliery-based trades, and for non-delivery based deals, it is Rs 2 per lakh turnover.

It is understood that with the government's move to impose the duty on proprietary trades, stock brokers will no longer enjoy the advantage they now do while undertaking jobbing or arbitrage between two exchanges. At present, brokers do not pay stamp duty at all if jobbing or arbitrage trading is done in their own accounts

The government move to bring the proprietary trades in the duty bracket will make them pay for such activities and improve its collection.

According to market sources, proprietary trading, jobbing and arbitrage turnover accounts for approximately 15-20% of the total turnover. The remaining 80-85% is contributed by institutions and retail investors.

Stamp duty is the second highest source of revenue for the Maharashtra government. Earlier, the state finance minister had mentioned that stamp duty informers would be rewarded, and there is a possibility that some such scheme may be announced in the state Budget.