Background:
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.
- The Share certificate must bear stamp duty as per State Stamp act.
- Stamp duty is payable even if security is issued in dematerialized form.
- Stamp duty is payable on issue price and not on the value of security.
- Stamp duty on share certificate is State subject, but Stamp Duty on Debenture Certificate is a Union Subject.
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.
http://www.shcilestamp.com/estamp_share_issuance.html
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.
FAQ’S
| 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 [email protected])
Read Other Articles Written by CS Divesh Goyal
(Republished with amendments)
Author Bio
Hello sir, please go through the following case:
Company is incorporated in 2013 and till today date share certificates are not issued. please let me know what to do in case of late issuance of share certificates and also detailed me about the back dated stamp duty and penalties thereof.
How much stamp duty is to be paid share subscription agreement in the state of Haryana?
Hi Divesh
Thanks for the detailed description.
Query- Do we have to pay stamp duty on share certificates issued after conversion of the CCDs into shares?
According to Indian Stamp Act, 1899, the Company shall pay the stamp duty within thirty days after the Issue of Share Certificate. So we may issue certy only after payment of stamp duty only ? not before that
I read your article on Tax guru regarding Stamp Duty on Issue of Share Certificates, Our company is having Registered office in Kolkata, West Bengal. The company has to issue share certificates towards allotment done in board meeting held in New Delhi.
Hello in case company has delayed in paying the stamo duty on issue of shares….the procedure for paying will be
1.ascertaining the liability of stamp duty
2.payment of the same
3.adjudication proceedings
4.payment of penalties.
Kindly confirm
stamp duty is paid on first issue after incorporation?
In which Section/rule of the Act, is mention the 30 days time limit for payment od stamp duty after issue Share Certificate?
What are all the taxes or formalities to be followed during RMAT of shares? Is share holder to pay any fees for that RMAT shares? Pl.reply.
Hey Divesh Goyal,
Thanks for your detailed post.
Quick question:
Is it that only listed companies need to pay stamp duty for issue of shares? Or should private limited companies also have to pay stamp duty for issue of shares?
As I understand from your post, share certificates to be issues within 60 days of registration and stamp duty to be paid within 30 days of that so that’s a total of 90 days from registration that stamp duty can be paid. Is this correct?
We have to pay stamp duty on issue of Share certificate amounting to Rs. 18.Can stamp duty on share certificate be paid by way of stamp paper?
Also let us know can we pay the stamp duty by way of franking.
What is the procedure to pay stamp duty on issue of Shares in Assam
CS Divesh Goyal in his Article has stated/advised in FAQ Section that there is no Stamp Duty payable on Transfer of Shares .
Is it the position in law ? please quote authority / relevant Section or Rule.
Regards.
Banerjee
what is the date from which stamp duty is payable on issuance of shares as per Delhi stamp act. The act on several occasion state about transfer of shares but not about the issuance of shares, kindly respond….. Thanks in advance
Does the company has to pay stamp duty on issue of shares in demat form.
Hi
Sir, I submit the share details entry form on 12-10-2016 but till date the status is shown as “Request Initiated”. Challan is not generated till date.
Please guide me regarding this regard.
what is difference between adhesive stamp and impressive stamp???????
i have a doubt regarding payment of stamp duty on issue of bonus shares to the equity shareholders who holds shares in demat form.
in the case how much stamp duty is to be paid in Maharashtra ?
and how much time is available for such payment of duty ?
and if we not paid within prescribed time, then what is the procedure to pay ??
Pls tell in which section of the Stamp Act, it is provided that Stamp duty has to be paid within 30 days of issue of share certificate because as per sec.17 of Stamp Act, it is provided that stamp duty has to be paid on or before execution of document.
If I’m issuing shares from Mumbai than I have to follow State Act or Central Act and on each share certificate I have to pay stamp duty?? Total amount is Rs. 1,00,000.
What is the time period for payment of stamp duty.
Good explanatory fact and views.
One question , Whether stamp duty is payable on “Bonus shares” , if yes, at what value.
with regards
Dear Vandana,
Yes, we have to submit required document to the Department.
Regards
Hello seniors,
I am Puneet working with the well known firm in the legal department.
Although its a very summarized article in case u need any further assistance for paying stamp duty to Department pertaining to Issue of Share u can contact on the below mentioned Mail ID.
ID: [email protected]
Regards,
Pls quote provision, where it is mentioned that if shares are in demat form, still company has to pay stamp duty on demat shares.
As far I know the procedure for payment of Stamp Duty on Issue of Share Certificates in Delhi has been changed to E.Filing of Application and E.Payment of Duty. No visit to the office of Commissioner Of Revenue, at Sham Nath Marg is required.
Hi,
Nice article, but I believe as per Section 17 of the IS Act, All instruments chargeable with duty and executed by any person in India shall be stamped before or at the time of execution.
Can you please advise.
regards
Dear Devesh ji
Very fruitful and nice summarized article. Please refer point no. G in FAQSs. The stamp duty on transfer of shares is also payable by means of share transfer stamp.
Dear Ranganath ji
Please highlight more on e-stamp duty. Do we have to submit the documents at Shamnath Marg and make the payment via e-payment.
Hi
Very well summarized. Just to add to it, the company can make ECS payment and the details are as below:
Bank Name : Corporation Bank
Branch address : Greater Kailash, Part – II, New Delhi – 110048
Account holder name : E- stamping Stock Holding Corporation of India Limited
Account number : 028600201000379
IFSC Code : CORP0000286
MIRC Code : 110017005
Regards