Payment of Stamp Duty on Share Certificates in Delhi

Share certificate being an instrument requires stamping as per the Indian Stamp Act. Stamp duty on share certificate is a state matter and delay in payment of stamp duty attracts penalty. Stamp duty is to be paid first at the time of incorporation on share certificate issued to the subscribers and thereafter on every further allotment of shares.

Time Limit for issuance of share certificate

As per section 56 of the Companies Act, 2013 read with relevant rules made there under

Sl No.	Event	Time period
1	Date of Incorporation	within 2 months
2	Date of allotment, in case of fresh allotment

Time Limit for payment of stamp duty without delay

As per Section 32 of the Indian Stamp Act, 1899,

Event	Time period
Date of issue of share certificate	within 30 days

Jurisdiction

The stamp duty must be paid where the registered office of the company is situated

Duty payable on stamping of shares

Rs. 1/- for every Rs. 1000/- or part thereof of the value of the share including the amount of premium.

Here value of the shares means:

As per Section 21 of Indian Stamp Act,

Stamp duty will be paid on the issue price not on the face value. (e.g. in case of issue of security at premium, the stamp duty is payable on the issue price and not on face value of security.

Documents required

• Executed Share Certificate
• COI, MOA and AOA of the Company
• PAS -3 with Receipt of Payment filed to ROC (in case of further allotment)

*All the documents shall be in pdf format and digitally signed by Director or person authorized for the same.

Company shall pay the stamp duty online on below mentioned link  https://www.shcilestamp.com/estamp_share_issuance.html

*Stamp duty on share certificate is State subject, so its vary state to state.

Process Duration

Once all the required documents submitted on the portal, then

• after 1-2 weeks the challan shall be generated
• Pay the Stamp Duty amount using Net Banking/Debit Card/ Cash/ NEFT/ RTGS.
• Print the acknowledgement and
• collect the e-Stamp Certificate from the nearest branch of Stockholding in Delhi by producing the printed acknowledgement at the counter.
• Upload the Scan copy of e-stamp Certificate
• After scrutiny and patching of e-Stamp Certificate, the Certificate of payment of stamp duty shall be issued and
• Certificate can be downloaded from the status menu online.

So, within in a month process of stamping will be complete.

• Further in case of delay

Once all the required documents submitted on the portal, then

• Reference number will be generated after submission.
• The request initiated status can be seen in the status column.
• Now, the hearing date shall be shown in the status column after 1-2 weeks or shall be provided via email or if not received within the specified time please contact to the Collector of Stamp, NCT of Delhi.
• In hearing with SDM, the penalty shall be levied up to 10 times of duty. The Penalty shall depend on justification of the Professional authorized for the same.
• The challan shall be generated within 1-2 week of hearing.

In case of duplicate / split share certificate

As per Article 25 of the Schedule – 1A of the Indian Stamp Act, 1899

Stamp duty of Rs. 10/- shall be paid because the stamp duty has already been paid on the respective share certificates bearing distinctive number of shares.

Consequence of non payment

In case of non-payment of stamp duty or evasion of payment of stamp duty on the issue of share certificate in case of allotment of share, the company shall be liable for heavy penalty under the Act, which may extend to 10 times of the duty.

Loopholes in the Act

The share certificate shall bear the stamp duty as per the respective State/Union Territory from where certificate is issued. So, it is not necessarily required to pay Stamp duty on share certificate in that state in which registered office of the company is situated, it shall depend on the execution of share certificate.

Now the question always arise where to pay stamp duty – the place where registered office situated or where the resolution was passed by the Board of Directors for issuance of share certificate. It shall depend on the place where execution of share certificate shall be done. Executed or Execution means Signed or Signature.

There are two school of thought on this:

First

As the stamp duty is payable only on the instrument hence, the place where the resolution by the Board of Directors is passed is not relevant. When the Board of a company passes a resolution for allotment of shares, the instrument i.e. a share certificate is not in existence. The instrument of share certificate came into existence only when, in terms with resolution, the share certificate sealed, if any, and signed.

Second

 The Board meeting can be held anywhere in the India and nowhere written in the Indian Stamp Act, 1899 and Companies Act, 2013 that Share certificate shall be issued only on registered office. The Common seal provision has already become optional as per the Companies (Amendment) Act, 2015 dated 29th May, 2015.

What to do in case of confusion:

Companies can take advantage of this loophole but it is depend on case to case basis that what would be beneficial for the Company. But it is advice to all please pay the stamp duty in that state where registered office of the company is situated.