What is stamp duty in mutual funds?

Stamp duty of 0.005% is applicable to all your mutual fund transactions since July 2020. This includes any new investments made in mutual fund schemes, whether they are equity, debt funds, or exchange-traded funds, and regardless of the mode of investment, be it SIPs or STPs. Both demat and physical transactions will be subject to stamp duty. It's important to note that this duty is only imposed on the purchase of new mutual fund units and does not apply when selling or redeeming existing units. Stamp duty will apply to your investment amount only, exclusive of any other charges.

The stamp duty rate for the purchase of mutual fund units is 0.005%. For transferring mutual fund units between Demat accounts, a stamp duty of 0.015% is charged.

For instance,

Consider you make an investment of Rs. 1,00,000

Applicable stamp duty = 0.005% of 100000 i.e Rs. 5

Thus your effective investment amount = Rs. 100000 - Rs. 5 = Rs. 99,995