As per Section 3 of Indian Stamps Act 1899, Every Share Certificate must bear the necessary stamp duty as per the Stamp Act of the respective State/ Union Territory from which Certificate is issued. The rates of stamp duty can be obtained with reference to relevant article of given State Act.
According to Companies Act, 2013,- “Every person whose name is entered as a member in the register of members shall be entitled to receive share certificate within two months after allotment (or within such other period as the conditions of issue shall provide).”
According to Indian Stamp Act, 1899, the Company shall pay the stamp duty within thirty days after the Issue of Share Certificate.
Issue of Share Certificate from other State:
√ Stamp duty payable on share certificate is lower in some states than other. It is ‘higher in Maharashtra’ and probably ‘Lowest in Delhi’.
√ Some companies having registered office in Maharashtra ‘Issue’ shares from other state by holding Board Meeting in that State.
√ BUT Companies Act nowhere specifies that share Certificates must be ‘Issued’ from “Registered Office only”. So now companies have to pay Duty on issue of Share Certificate as per State where Registered Office of Company is situated.
Stamp Duty on Issue of Duplicate Share Certificate:
Duplicate Share Certificate: One issue is whether stamp duty is payable again when a duplicate or split share certificate is issued. Section 3(a) of Indian Stamp Act states that every instrument mentioned in the Schedule I of Indian Stamp Act which, not having been previously executed by any person, is executed in India; shall be chargeable with stamp duty of the amount indicated in Schedule I.
Rate of Stamp Duty: Rate of the said stamp duty in Delhi shall be “One rupee for every one thousand, or a part thereof, of the value of the shares, scrip or stock including the amount of PREMIUM”.
Penalty Penalty shall upto 10 times depending upon the order being passed by department. However penalty can be lower than 1 time as decided by authority.
Procedure For Submission of Stamp Duty in Delhi:
A. First Company will make allotment of Shares.
B. Company will is issue Share Certificates within 60 days of Allotment of Shares.
C. Prepare Documents:
After issue of shares, Stamp duty shall be paid to the ex-chequer of government within 30 (Thirty) days from issue of Share Certificates. Following documents shall be prepared:
A) Covering Letter (duly affixed Rs 10/- Court Fee Stamp).
B) List of Existing directors.
C) List of shareholders.
D) Copy of Original Share Certificate
E) Certified Copy of INC-32/ PAS-3 with Challan.
F) Certified Copy of Memorandum & Article of Association.
G) Rs 10/- as adjudication fee to be deposited with cashier of the department.
H) Authority letter in favour of Director / professiona.
D. Submission Of Documents:
At the time of issue of shares, Stamp duty shall be paid to the exchequer of government within specified period. Above discussed documents shall be prepared & submitted to Revenue Department online on their website.
E. Issue of Challan:
i. Challan has been issued by department online.
ii. Payment of challan shall be made to SHCIL. (online or offline)
F. Deposit of Challan:
i. After payment of challan. Receive the copy of Stamp paper of duty value from the office of SHCIL
ii. Submit such Stamp Paper in Revenue Department in Physical.
|Face value of Share Capital (A)||Premium Amount (B)||Total Value of Share Capital (C = A+B)||Stamp Duty to be paid (C*0.10%)|
|Rs. 1 Lac||0||Rs. 1 Lac||Rs. 100|
|Rs. 1 Lac||Rs. 9 Lac||Rs. 10 Lac||Rs. 1,000|
|Rs. 10 Lac||0||Rs. 10 Lac||Rs. 1,000|
|Rs. 10 Lac||Rs. 90 Lac||Rs. 1 Crore||Rs. 10,000|
|Rs. 1 Crore||0||Rs. 1 Crore||Rs. 10,000|
|Rs. 1 Crore||Rs. 99 Crore||Rs. 100 Crore||Rs. 10,00,000|
Stamp Duty Not Paid Within 30 Days of Issue of Certificate
The procedure is same as procedure for submission of Stamp Duty on time(as discussed in previous point) but the only difference is that we have to pay penalty i.e. upto 10 times depending upon the order being passed by department.
A notice is being sent by department to the Company if it fails to pay the Stamp duty within Time Limits.
|A.||Whether stamp duty will be paid on issue of share Certificate in dematerialized form.|
|–||Yes it is mandatory to paid stamp duty on issue of share Certificate in dematerialized form.|
|B.||Value on which Stamp Duty payable on Share Certificates?|
|–||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.)
|C.||Place from where Share Certificate can be issued by the companies under Companies Act, 2013.|
|–||Companies Act nowhere specifies that share certificate must be ‘Issued’ from registered office only.|
|D.||Jurisdiction over Share Certificate or Debenture Certificate?|
|Stamp duty on Share certificate is State subject, But Stamp duty on Debenture Certificate I Union subject.|
|E.||Whether stamp duty will be payable again when duplicate or split Share Certificate is issued.|
|F.||As per Regulation 25 of Schedule I of Indian Stamp Act, stamp duty payable on counterpart of duplicate of an instrument is maximum One Rupees. Hence stamp duty of “ONE RUPEES” should be sufficient.|
|G.||If a Company Having registered office in Delhi & had Board meeting outside Delhi regarding Issue of Share Certificates, then what is the applicability?|
|Legally & technically Speaking, Stamp Duty should be applicable as per the law of that state & No duty is payable under Delhi stamp Act. However this view is not currently accepted by department. So if registered office in Delhi then no matter where Board Meeting will be held for issue of share certificate. Company has to pay stamp duty|
|H.||Is Stamp Duty applicable on premium also?|
|Yes, Stamp duty is payable on Face Value including premium.|
(Author – CS Divesh Goyal, ACS is a Company Secretary in Practice from Delhi and can be contacted at firstname.lastname@example.org)
(Republished with amendments)