Payment of stamp duty on share certificates

DEFINITIONS:-

Stamp Duty:-. Stamp duty is a duty levied on the legal recognition to pay amount of tax on certain documents/instruments.

Share Certificates:-Share certificate is a certificate given to the holder of equity shares of the company in form SH-1. A share certificate is a signed written document that serves as legal proof of ownership of the number of shares indicated in that certificate. The Companies Act, 2013 has prescribed the events along with time period within which company have to issue share certificates.

STAMP DUTY PAYMENT IN DELHI AS PER SECTION 3 OF THE INDIAN STAMP ACT, 1899

As per section 3 of the Indian Stamp Act, 1899 every instrument mentioned in the schedule is chargeable with the proper duty.

In Delhi stamp duty payable on the share certificates is Rs. 1/- for every Rs. 1000 or part thereof of the value of the shares or stocks including the amount of premium. Every company is required to pay stamp duty on the value of shares or stocks via online mode within the period of 30 days from the date of issue of share certificates.

CONSEQUENCES OF NON PAYMENT OF STAMP DUTY:-

If a company failed to pay stamp duty within prescribed period of thirty days then: –

• Company has to attend hearing on the date that would be given by the concern department/authority and;
• Shall have to pay penalty impose by the authority along with stamp duty.

ISSUE OF SHARE CERTIFICATES

Section 56(4) of the Companies Act, 2013 contains the time period within which company shall issue share certificates after incorporation and allotment:-

Let see few examples:-

1. XYZ Pvt. Ltd company limited by shares, incorporated on 01st April, 2019. Issued 10,000 equity shares of Rs. 10 each to the subscribers of Memorandum of Association and issued share certificates to the subscribers on 15^th May, 2019. What would be duty company have to pay if company submitted application online for payment of duty on 13^th June, 2019?

In Delhi stamp duty payable on the share certificates is Rs. 1/- for every Rs. 1000 or part thereof of the value of the shares or stocks including the amount of premium.

The Company has submitted application on 13^th June, 2019 i.e within the period of 30 days from the date of issue of share certificates.

Value of shares:-1,00,000 (10,000*10)

Stamp duty: –   Value of shares

1,000

 :-  1,00,000

1,000

 :- 100/- is stamp duty

2. ABC Pvt. Ltd company limited by shares, incorporated on 01st April, 2019. Issued 10,000 equity shares of Rs. 10 each to the subscribers of Memorandum of Association and issued share certificates to the subscribers on 15^th May, 2019. What would be duty company have to pay if company submitted application online for payment of duty on 17^th June, 2019?

The Company has submitted application on 17^th June, 2019 i.e after the period of 30 days from the date of issue of share certificates. Therefore, in this case company has to first attend the hearing and Shall pay Rs. 100/- stamp duty along with the penalty imposed by the concern department/authority.

3. DEF Pvt. Ltd Company limited by shares has made allotment of 20,000 equity shares of Rs. 10/-each and at premium of Rs. 5/- per share on 01st May, 2019 and issued share certificates to allottees on 27^th May, 2019. What would be duty company have to pay if company submitted application online for payment of duty on 18^th June, 2019?

Value of shares

Face value of Rs. 10 each – 20,000*10= 2,00,000

Premium of Rs. 5 each  – 20,000*5  = 1,00,000

3,00,000

Stamp duty: –   Value of shares

 1,000

:- 3,00,000

1,000

:- 300 is stamp duty

 LIST OF THE DOCUMENTS REQUIRED FOR STAMPING:-