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.

ADHESIVE STAMP ON SHARE CERTIFICATE

  • The Share certificate must bear stamp duty as per State Stamp act. Stamp duty can be paid by putting adhesive stamps and cancelling the same. In case of issue of large number of shares, stamp duty can be paid in lump sum and this fact should be mentioned on the share certificates.
  • In such cases, putting adhesive stamp on each share certificate is not necessary. 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:

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.

DELHI STAMP ACT

As per Delhi Stamp act, stamp duty shall be paid on “CERTIFICATE OR OTHER DOCUMENT evidence the right or title of the holder thereof, or any other person,   either to any shares, one thousand stock in or of any incorporated Co. or other body corporate or to become proprietor of shares, scrip or stock in or of any such Company or body.”

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 shall be 1 to 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 Allot 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 exchequer of government within 30 (Thirty) days from issue of Share Certificates. Following documents shall be prepared:

  1. Covering Letter (duly affixed Rs 10/- Court Fee Stamp).
  2. List of Existing directors.
  3. List of shareholders.
  4. Share Certificate
  5. List of Allottees
  6. Certified Copy of Form-2/ PAS-3/ INC-7 with Challan.
  7. Certified Copy of Memorandum & Article of Association.
  8. Certificate of previous stamp duty paid, if any.

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 Delhi online within 30 days of Issue of Share Certificates..

The Department of Revenue, Delhi has launched “On-line Stamp duty Payment on Issuance of Shares”. This facility is to be utilised by Companies towards Payment of Stamp Duty on issuance of New Shares. This facility implemented for the Jurisdiction of NCT Delhi only.

  • First Step company will create log in of the Company on http://www.shcilestamp.com/estamp_share_issuance.html
  • Companies after taking login will populate the relevant details of the New Shares issued against which stamp duty payment to be made.
  • Submit all the documents online on the portal.

Note: 

Certified that all the aforesaid mentioned documents attached are copy of original and true copy of records of Company and should be digitally signed by Company Director/Company secretary/Chartered accountant.

E. PREPARATION OF DUTY CHART:

  1. Duty Chart is prepared by the department nearly about 15 to 20 days after submission of documents.
  2. Duty Chart includes Name of the Company, Address of the Company, Face Value of Shares issued, Premium Charged on Shares, Date of Issue, etc.

F. PREPARATION OF CHALLAN:

  1. Challan has been issued by department in Triplicate on the basis of Duty Chart Made.
  2. The same Challan has to be paid at Specified Bank (List of Bank will be provide by Department) within 5-6 working days for smooth working of your file/case

G. PAYMENT OF CHALLAN:

After the preparation of Challan (in triplicate), you have to make payment of Challan (in triplicate) in Specified Banks within 5 – 6 Working Days, recommended.

H. DEPOSIT OF CHALLAN:

i.  After submission of challan, we have to deposit a copy of challan with the revenue department.

ii. After verification of challan (after 20 days of depositing of challan), department issue a certificate of Stamp duty paid (1 day to 100 days).

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. 1 to 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.       Is Stamp Duty payable on Transfer of Shares?
  There is No Stamp Duty payable on Transfer of Shares.
H.       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
I.         Is Stamp Duty applicable on premium also?
  Yes, Stamp duty is payable on Face Value including premium.
J.         What is the no. of visits for getting Stamping done with department?
  You have to visit min. 8 times if your case is of penalty i.e.

(a) Submission of documents.

(b) For taking date of Hearing.

(c) For Hearing of Your case.

(d) For taking challan.

(e) For Deposit of challan at Specified Banks.

(f) For submission of copy of Challan to department.

(g) For Verification of Challan.

(h) For taking Certificate of Stamping.

(Author – CS Divesh Goyal, ACS is a Company Secretary in Practice from Delhi and can be contacted at csdiveshgoyal@gmail.com)

Read Other Articles Written by CS Divesh Goyal

(Republished with amendments)

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20 responses to “Stamp Duty on Issue of Share Certificates”

  1. Anita S says:

    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?

  2. Aashita Vishwakarma says:

    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.

  3. Esha says:

    What is the procedure to pay stamp duty on issue of Shares in Assam

  4. A Banerjee says:

    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

  5. anurag says:

    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

  6. Shivanand says:

    Does the company has to pay stamp duty on issue of shares in demat form.

  7. Karandeep says:

    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.

  8. prudhvi says:

    what is difference between adhesive stamp and impressive stamp???????

  9. karan kumar says:

    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 ??

  10. Peer says:

    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.

  11. Neha Chandan says:

    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.

    • Mohinder says:

      Do we need to file the change and transfer of share in ROC
      Do we need to pay stamp duty on transfer of shares of private Ltd co
      Can a share of a private limited co be transfred in back date

  12. Devesh Garg says:

    Good explanatory fact and views.

    One question , Whether stamp duty is payable on “Bonus shares” , if yes, at what value.
    with regards

  13. Puneet Bhardwaj says:

    Dear Vandana,

    Yes, we have to submit required document to the Department.

    Regards

  14. Puneet Bhardwaj says:

    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: puneet12.star@gmail.com

    Regards,

  15. Peer Mehboob says:

    Pls quote provision, where it is mentioned that if shares are in demat form, still company has to pay stamp duty on demat shares.

  16. C.A. J.K.Agarwal says:

    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.

  17. Anupa says:

    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

  18. VANDANA GUPTA says:

    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.

  19. Ranganath says:

    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

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