Stamp Duty On Mutual Funds

The Effect Of Stamp Duty

A common question among investors is whether stamp duty on MFs will have a significant impact on overall returns.  The short answer? Not much.

How It Works

If you hold your units for a month at least, the impact is negligible.

For a holding period of a year, the impact goes down to 0.005% (annualised). 

Why ?

The Dept of Revenue instructed that from Jul 1 2020, purchase & transfer of MFs would attract a stamp duty of 0.005% of the purchase value & 0.15% if transferred from one DEMAT account to another. 

How It’s Calculated

If you invest in an MF as a lump sum or SIP, the amount will be invested after deducting any transaction charges AND the stamp duty. 

Think of it as a nominal entry fee.

How It Impacts Growth Rate

There is not much of an impact as long as you stay invested for 30 days.

The impact is about 0.005% over a year-long period.


In the case of SIPs, each instalment is considered a fresh purchase and attracts a 0.005% stamp duty. Lump sum investments also attract the 0.005% duty.

Redeeming Your Units

Stamp duty is only paid on purchase, not when redeeming your MF units. 

Paying Stamp Duty

The stamp duty amount is automatically deducted by the AMC when they process your purchase of units.

Stay Invested!

Stamp duty is a nominal amount and shouldn’t deter you from buying mutual fund units - and it shouldn’t change how you approach your goals and invest. 

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.