Finance Ministry rebuts fake news, says no extension of India's Financial Year amid coronavirus COVID-19 spread

New Delhi: Union Finance Ministry on Monday (March 30) denied the news circulating in some section of media that financial year has been extended, and termed it fake news amid the outbreak of coronavirus COVID-19. 

Issuing a statement, the Finance Ministry said, "There is fake news circulating in some section of media that the financial year has been extended. A notification issued by the Government of India on 30th March 2020 with respect to some other amendments done in the Indian Stamp Act is being misquoted."

"There is no extension of the financial year," said the Finance Ministry, adding that "notification has been issued by Department of Revenue, Ministry of Finance dated 30th March, 2020 which relates to certain amendments to the Indian Stamp Act." 

"It pertains to putting in place an efficient mechanism for collection of Stamp Duty on Security Market Instruments transactions through Stock Exchanges or Clearing Corporation authorized by Stock Exchanges Depositories. This change was earlier notified to be implemented from 1st April 2020. However, due to the prevailing situation, it has been decided that the date of implementation will now be postponed to 1.7.2020," the notification clarified. 

Notably, the government has deferred the implementation of a simplified stamp duty collection process for listed securities by three months in the wake of disruptions caused by the Covid-19 pandemic.

As per amendments to the Stamp Act, 1899 introduced in The Finance Bill, 2019, the government decided to introduce a centralised system of stamp duty with a unified rate for all financial securities transactions. The said changes were to become effective from January 9 first but it was later shifted to April 1.

Through a gazette notification, the government has now shifted its implementation to July 1 to give more time to market participants to shift to the changes hit hard by the coronavirus outbreak.

As per the amendments and the new notification, stock exchanges will now collect stamp duty for trading in securities at a unified rate from July 1, and deposit the proceeds with the Centre which will then divide it among states where the trade took place.

The government has reportedly decided to amend the Stamp Act as differential rates of stamp duty on securities created confusion and resulted in brokerages choosing their place of incorporation to destinations like Daman and Goa where the stamp duty rate is lower.