Companies may have to pay stamp duty on mergers and acquisitions in states like West Bengal, which do not have their own Act in this regard. This will happen if the Finance Ministry”s suggestions on amendments to the over-a-century-old Indian Stamp Act are implemented without any change.
The ministry today floated its suggestion for public comments on modification of the Act enacted in 1899. The proposals have already been sent to the states for their views.
As per the suggestion, mergers and acquisitions will be covered under the Act. Explaining the provision, Krishnava Dutt, Managing Partner of law firm Argus Partners, said that some states like West Bengal do not have their own separate Act.
In those states, mergers and acquisitions will be covered under the Indian Stamp Act, unless there are court directives. The current Act is silent on the issue.
However, there are certain states like Maharashtra where there are specific stamp duty Acts, but they already cover mergers and acquisition under their legislations. The proposed changes in the Act will also prevent carrying out insurance business without stamped policies.
For this purpose, the penalty is sought to be increased from Rs 200 to Rs 500. In the case of mining, where a lease is extended by private persons, stamp duty is proposed to be enhanced to Rs 2 lakh a year from Rs 20,000 at present.
In case of stamp duty on immovable property like real estate, guidelines have been suggested to fix market value of the property on which stamp duty is imposed. The guidelines say in case land revenue is paid on land, it will be taken into account for stamp duty.
In case of other properties, local rates or municipal taxes may be considered for stamp duty. While the Centre prescribes the rates of stamp duty on bills of exchange, cheques and transfer of shares, states fix rates on agreements, affidavits, articles of association of a company, partnership deeds, lease deeds, mortgages and power of attorney.
Has there been any change in westbengal stamp act for stock broking house. kindly let me know
Currently also west bengal is liable to pay stamp duty on amalgamations since it does not have its own act, it is governed by indian stmp act there is a specific amendment for west bengal providing duty in case of amalgamations, demergers (refer article 23a of the indian stamp act) the proposed amendment will bring clarity in case of other states like tamil nadu for which there is no specific clause in the indian stamp act (unlike west bengal) dealing with amalgamations etc