What is stamp duty

Stamp duty is a form of tax that is levied on various financial transactions, such as the transfer of property, shares, and certain legal documents. It is typically paid by the buyer or transferee and is calculated as a percentage of the transaction value. The purpose of stamp duty is to generate revenue for the government and to discourage speculative trading or excessive turnover in financial assets. In the context of property transactions, stamp duty is often a significant expense for buyers and can vary depending on the value of the property and the location. In some cases, first-time buyers or certain types of properties may be eligible for exemptions or reduced rates of stamp duty. For share transactions, stamp duty is typically levied on the purchase of stocks and securities. The rate can vary depending on the type of security and the value of the transaction. In some jurisdictions, stamp duty on share transactions has been replaced by other forms of taxation, such as a financial transaction tax. Stamp duty is also applicable to certain legal documents, such as contracts and agreements. Again, the rate and applicability of stamp duty can vary depending on the nature of the document and the jurisdiction. Overall, stamp duty is an important source of revenue for governments and is an integral part of the financial system. It is important for individuals and businesses to be aware of stamp duty obligations when engaging in transactions that are subject to this form of taxation.