As the trade in shares and stocks flourishes in the Capital and people invest more money in the share market, the revenues of Delhi government charged as Stamp duty on share transaction has declined progressively. Concerned at the rapid decline in revenue, the Delhi government has now decided to rationalise stamp duty charged on Brokers' notes and share transaction.

At present, the state government charges Rs 1 for every Rs 10,000 of the value of security at the time of its purchase or sale. Soon, the charges for this would be 20 paise per transaction of Rs 10,000, whether it is non-delivery transaction or derivative transaction.

A Bill to rationalise the Stamp duty would be presented and passed in the Budget Session of the Delhi Assembly, beginning March 17. The Delhi Cabinet on Wednesday gave its approval to the Indian Stamp (Delhi Amendment) Bill, 2008, which has the necessary changes.

"With dematerialised trading in stocks, the value of stamps on share transfers collected by the Delhi Treasury declined from Rs 10.02 crores in 1999-2000 to Rs 4 crores in 2006-07," said the Cabinet note on the reasons for amending the Indian Stamps Act.

The new rates of Delhi would be similar to that of Maharashtra, Gujarat and Rajasthan where stocks and shares as an investment option is very popular. On the decline of the collection, officials in the Finance Department said one reason was because brokers conduct trade through terminals in 'demat' form, which is not covered in the Indian Stamps Act as applicable to Delhi.

The second reason, according to the officials is non-compliance. "The revenue could jump more than 10 fold and would exceed Rs 50 crore per annum from a little over Rs 4 crores at present after the implementation of the Act," said a senior official.

He said there would be increased bonafide transactions and transparency. "Delhi is second only to Mumbai in share transaction in the country and the potential for higher revenue collection is considerable," the official explained.