A. INDIAN STAMP ACT, 1899

Q. What is the purpose of Indian Stamp Act?

Ans. The purpose of enacting such an Act is to raise revenue for the local governments. Additionally, payment of stamp duty imparts legality to the document and this can be submitted as an authentic document in courts.

Q. What is stamp duty? Why should stamp duty be paid?

Ans. It is a tax, similar to sales tax (VAT) and income tax collected by the Government. Stamp Duty is payable under section 3 of the Indian Stamp Act, 1899. Rates of Stamp Duty payable for different types of documents are as per Schedule I. Stamp Duty must be paid in full and on time. If there is a delay in payment of stamp duty, it attracts penalty. A stamp duty paid document gets evidentiary value and is admitted as evidence in court. Document not properly stamped, is not admitted as evidence by the Court.

Q. How should one sign an instrument affixed with adhesive stamp?

Ans. As per the provisions of section 12, any person executing an instrument affixed with adhesive stamp, shall cancel the adhesive stamp so affixed by writing on or across the stamp his name or initials. If such an adhesive stamp has not been cancelled in the aforesaid manner, such a stamp is deemed to be unstamped.

Q. How should instruments stamped with impressed stamp be written?

Ans. As per the provision of section 13 of the Indian Stamp Act, 1899, any instrument on an impressed stamp, shall be written in such manner that the stamp may appear on the face of the instrument and cannot be used for or applied to any other instrument i.e., cancel the adhesive stamp so affixed by writing on or across the stamp his name or initials. If such an adhesive stamp has not been cancelled in the aforesaid manner, such a stamp is deemed to be unstamped.

Q. How are stock and marketable securities valued?

Ans. As per the provision of section 21 of the Indian Stamp Act, 1899, any instrument chargeable with ad valorem duty in respect of any stock or any marketable or other security, such duty shall be calculated on the value thereof on the day of the date of the instrument.

Q. How is a property subject to mortgage, when transferred to the mortgagee, charged?

Ans. As per the provision of section 24, when any property subject to a mortgage is transferred to the mortgagee, he shall be entitled to deduct from the duty payable on the transfer the amount of any duty already paid in respect of the mortgage.

Q. When can one ask for refund of stamp duty?

Ans. As per the provisions of sections 49, 50, 52, 53 and 54, Stamp Duty can be refunded under the following circumstances:

1.    Spoiled Stamps;

2.    Misused Stamps;

3.    Stamps used in excess of the value required; and

4.    Stamps not required for use.

Q. How is stamp duty paid in transactions where more than one instrument is required?

Ans. As per section 4 of the Indian Stamp Act, 1899, stamp duty is paid only on one of the principal instruments and on the balance documents only minimum duty is payable.

Q. Can stamp duty be paid in India, for documents executed outside India?

Ans. As per section 18 of the Indian Stamp Act, 1899, any instrument executed out of India can be stamped in India, provided it is stamped within 3 months from the date it has been first received in India.

Q. Stamp Duty is paid on ad valorem basis. What does this implies?

Ans. It means that — Stamp Duty is paid on basis of value of property.

Q. How stamp duty payable can be determined?

Ans. Usually, the executor himself can calculate the stamp duty payable on document as per the rates provided in the Indian Stamp Act, 1899 or the State Stamp Act, as the case may be. Under section 31 of the Indian Stamp Act, 1899, the executor can also apply to the Collector of Stamps after payment of the requisite fee, for the purpose of obtaining the opinion of the Collector of Stamps as to the amount of stamp duty chargeable on the instrument.

Q. How stamp duty on transfer of shares of a company is computed?

Ans. Stamp duty is payable under the Indian Stamp Act, 1899 on transfer of shares of an Indian company. If the shares are transferred under the depository mechanism, no stamp duty is payable on such transfer of shares. The stamp duty on transfer of shares as per Article 62 of the Indian Stamp Act, 1899 is 0.2 5% of the value of the transfer.

Q. Is a WILL made by an individual chargeable to stamp duty?

Ans. No stamp duty is payable on an instrument of WILL whether subject to the Indian Stamp Act or any state laws.

Q. Is there any stamp duty on merger, de-merger, hive off, slump sale of a business by an Indian company?

Ans. The Indian Stamp Act, 1899 do not specifically provide for any specific entry in Schedule I with regard to merger, de-merger, hive off, slump sale of a business by an Indian company. However, this does not mean that no stamp duty is payable on instruments which are used to implement such transactions. The issue is subject to several litigation and the revenue authorities take different views in different cases.

In states like Maharashtra and Gujarat, the matter is resolved to some extent by providing specific entries for levying stamp duty on merger and de-merger which are implemented under the Companies Act, 1956.

Q. Is there any penalty for violation of Stamp laws?

Ans. Yes. The penal provision includes imprisonment and fine or both for offences under the Stamp Laws.

Q. What are the consequences of non payment of stamp duty?

Ans. Every person having by law an authority to receive evidence and every person in charge of public office before whom any instrument chargeable, in his opinion, with duty, is produced or comes in performance in his function, shall, if it appears to him if such instrument is not duly stamped, impound the same.

No instrument chargeable with duty is admitted in evidence for any purpose or can be acted upon, registered or authenticated unless such instrument is duly stamped.

(B) BOMBAY STAMP ACT, 1958

Q. What are the Instruments liable to be stamped under the Bombay Stamp Act?

Ans. Instrument includes every document by which any right or liability is or purports to be created, transferred, limited, extended, extinguished or recorded, but does not include a bill of exchange, cheque, promissory note, bill of lading, letter of credit, policy of insurance, transfer of share, debenture, proxy and receipt.

Q. Is stamp duty payable on the instrument or transaction?

Ans. It is payable on instruments and not on transactions. Stamp duty should be charged on the basis of the contents of the instrument only. If any information essential for working out stamp duty is missing in the instrument, valuation officer can call for the same. In respect of immovable property, information such as the Carpet or Built-up area of the flat, number of floors in the building, year of construction, name of Division/Village and C. S./C .T. S. number of plot of land on which property is situated must be mentioned in the agreement for quicker response.

Q. Is stamp duty payable on all instruments/documents relating to transfer of immovable property?

Ans. Except transfer by WILL (or by original nomination in a co­operative housing society) all transfer documents including agreements to sell, conveyance deed, gift deed, mortgage deed, exchange deed, deed of partition, power of attorneys, leave and licence agreement, agreement of tenancy, lease deeds, power of attorney to sell for consideration, etc. have to be properly stamped before registration.

Q. Is there a time frame within which the Stamp Paper must be used?

Ans. According to section 52B, a stamp paper should be used within six (6) months from the date of purchase. Any stamps not used within this period are invalid.

Q. Is a refund possible if the Agreement has not been signed and the parties have paid the Stamp Duty and the transaction is called off?

Ans. When a person has stamps in his possession which have been spoiled or rendered unfit or the person does not require to immediately use the said stamps, or the transaction is called off then such a person should deliver the above said stamps to the Collector of Stamps.

In this case, the person is required to make an application within six (6) months from the date of the purchase of stamps. Under section 52 of the Bombay Stamp Act, the person should also submit the affidavit mentioning the reasons for which the Stamps were purchased and the reasons why the refund application is being made.

Q. In whose name should the stamp paper be purchased? If it is purchased in the name of an Advocate, can the client exercise the document?

Ans. As per section 34 of the Bombay Stamp Act, 1958, the stamp papers should be in the name of one of the parties who have signed/who would be signing the instruments.

Q. How is Mumbai City bifurcated for stamp duty purpose?

Ans. Mumbai city is divided as follows:

1)              Mumbai City District: Mumbai City District is from Colaba to Mahim/Sion and consists of 19 Revenue Divisions;

2)              Mumbai Suburban District: Mumbai Suburb is from Bandra to Dahisar and from Kurla to Mulund and consists of Andheri Taluka, Borivli Taluka, each having approximately 35 revenue villages. Andheri Taluka is from Bandra to Andheri, Borivli Taluka is from Jogeshwari to Dahisar and Kurla Taluka is from Kurla to Mulund.

Q. How does one ascertain the right amount of stamp duty in respect of immovable property?

Ans. You can find out the market value of a property and the proper stamp duty amount on it from the Stamp Duty Ready Reckoner and Market Value of Flats in Mumbai, as follows:

If your property is situated in Mumbai City (i.e., from Colaba to Mahim/Sion) you should know the Division name and C. S. No. (Cadestral Survey No.) of your property and if your property is situated in Mumbai Suburb (i.e., from Bandra to Dahisar and from Kurla to Mulund) you should know the Village name and C.T.S. No. (Chain and Triangulation Survey No.) of your property. This information is available from property card of the land on which your property is situated and a copy of property card is generally available from your society office or from original builder’s agreement.

Q. Is there a penalty for not paying the requisite stamp duty?

Ans. Section 34 of the Bombay Stamp Act, 1958, provides a penalty of 2% per month of the deficient portion of the stamp duty for every month or part thereof, from the date of execution of the instrument, subject to a maximum of 2 times the deficient portion of duty.

Q. In case of resale of the flat, who is required to pay the stamp duty the purchaser or the seller?

Ans. The parties can decide who shall pay the Stamp Duty. As per section 30 of the Bombay Stamp Act, 1958, if nothing is mentioned in the agreement and if the transaction relates to resale of flats then the stamp duty will have to be paid by the purchaser.

Q. What is the Stamp duty on units or premises of Information Technology or Information Technology enabled services?

Ans. These units or premises are exempted to certain extent from stamp duty for the period commencing from the 4th June, 2003 to 31st May, 2008. (Notification No. Mudrank 2003/2093/C.R. -462/M-1, dated 29th December, 2003)

Q. When is stamp duty payable on an instrument in Maharashtra?

Ans. All instruments are liable to be stamped before or at the time of execution of instrument or immediately thereafter on the next working day following the date of execution, when executed in the State of Maharashtra.

Further, according to section 18 of the Bombay Stamp Act, any instrument executed outside the State is liable to duty within three (3) months from the date of receipt of such instrument in the State, provided it relates to a property situated in the State, or a matter or thing to be done in the State.

Q. What is Adjudication?

Ans. Adjudication is process by which an opinion of Collector is obtained as to the duty, if any, with which or the Article under which that instrument is chargeable.

Q. Is there a procedure for adjudication of stamp duty?

Ans. For the purpose of adjudication, the person who is a party to the instrument has to furnish a true copy of the instrument or an abstract and an affidavit stating the facts and such other evidences as required, along with prescribed fee.

Q. Is the chargeability of stamp duty determined by the Collector of Stamps in adjudication final? Can a person go in appeal against the order passed by the Collector of Stamps. Is there any time limit for filing the appeal?

Ans: The chargeability of stamp duty on the instrument as determined by the Collector of Stamps is not final. The person affected by the order of the Collector of Stamps can go in appeal to the Chief Controlling Revenue Authority as provided in section 53 of the Bombay Stamp Act, 1958. Though there is no time limit prescribed for the filing of appeal, it will be desirable to file the appeal at the earliest to avoid complications.

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133 Comments

  1. Brijesh shrivastava says:

    Somebody will execute oan documents in Dubai in front of Bank officials along with stamp paper, is indian stamp paper valid in Dubai or how this documents will be made valid.

  2. Nikhil says:

    Does a stamp paper purchased in name of dena bank on a date befor merger and used within validity after merger with other bank where the existence of dena bank is not there. Will the stamp papers be valid.

  3. Yogeshkumar Shah says:

    Sir, i had took bank guarantee for work contract in favor of MCGM for the period of 2 year and had paid stamp duty @ 0.50% under article 54 of Maharashtra Stamp Act, later same bank guarantee is extended for further 2 years but before expiry of original 2 years. whether in this case i have to pay stamp duty again for extension of BG.

  4. sandeep kumar srivastava says:

    Can someone advise me on my following query?

    One Lease deed between the parties was executed for 9 years tenure for property ‘A’ and registered on Feb.2017 in Punjab, with full stamp duty paid on it.

    Now the same parties want to enter into fresh lease deed for 9 years tenure for same property ‘A’ with enhanced rent and get the same registered with stamp duty for enhanced value in June 2019.

    Can the parties avail the credit of stamp duty of balance period of “~6 years 3 months” for proportionate previous rent/value and only pay the stamp duty for passed period (which it had actually used) and enhanced rent/lease value?

  5. Amit says:

    In case of Mortgage for Bank Loan in Madhya Pradesh, who needs to pay the Stamp Duty?

    In a case, the borrower have bought the Stamp in his name for mortgage in the Bank from where he have taken a CC. The father of the borrower is the Guarantor and the owner of the Property.

    The Guarantor have received a notice from the registrar for non payment of Stamp Duty, where infact it is paid by the Borrower.

    Is this demand valid?

    Thanks

  6. P. Dinesh says:

    Sir pl advice on, in consortium finance, same banker sanctioned additional limits for expansion made on same property(which is already mortgage with same bankers) . the stamp duty on same property is required or not for additional finance.

  7. Keki Bapuna says:

    Sir,
    we wanted a copy of notification wherein we were told that collector no more takes transfer charges when we bought a property in WTC, cuffe parade in 2009. The earlier transfers if the buyer had to pay transfer charges to collector on sqft basis(approx Rs 1500/-). but with new notification between 2006-2009 all new buyers did not pay any such transfer fees to the collector. Would be grateful if we can get a copy of this notification or atleast reference details. Regards

  8. seerat says:

    sir,
    i wanted to know how long does it take for the adjudication of stamp duty in case of a merger in Mumbai?
    The entire process takes how long?

  9. C P MORJAL says:

    As T&C applies as per agreement with a builder I had paid annual Service & Maintenance Charges through cheques in advance for three years. All the cheques encashed by the builder. However, it is observed that the receipts were issued by the one who is neither the builder himself under his name and seal nor under the seal of his sole proprietorship company and the receipts were not affixed with appropriate revenue stamp. When I brought this point to the notice of the builder he demanded 15% of the value of the flat if I require legal receipts with revenue stamps.

    Kindly enlighten me what should I do in this case?

  10. SitaRam Badeja says:

    What is stamp duty on document for extension of limitation on a loan account called BC Letter in the state of Uttar Pradesh?????

  11. Darshan says:

    Hey Experts Advise Please – Can we apply for refund of Stamp Duty amount even after 6 months which was paid for purchase of new flat ?

  12. Virendra jain says:

    Dear Sir,
    Regarding resale flat.
    We did agreement to buy for resale flat on 18-02-2015 and paid 3,25,0000/- for stampy duty and 30,000 for reg fees. but due to some technically issue in the document blue pribnt. bank is not providing home loan. i have applied some finance company for home loan.
    if agreement got cancelled then can i get refund stamp duty and reg fees which was paid at the time of agreement to sale.
    so please let me know the procedure for that.
    Thanks
    Virendra jain
    09619066698
    Mumbai

  13. Aatish Gawas says:

    Hi,

    We are going to buy resale flat in new panvel area which not comes in cidco.Flat papers are good.Plot is NA.

    Flat cost is 25,30,000/- (1 BHK – 635 sqft).

    As per rules stamp duty is 6% of flat cost which is 151800/-

    But our agent is telling that we have to pay this amount online but receipt for same will get generated for amount 78000/- only, as it is resale flat at seller is going to do registration two days prior to us, as he has not registered yet.

    Is there any provision as such?

    Agent is asking to transfer stamp duty money to his account as he has account in IDBI bank and its only bank through which we can pay stamp duty online.

    Kindly advice. Its very urgent.

  14. sunil kumar singh says:

    we have received certificate for exemption of stamp duty from office of the district Industries Centre, Thane under Package scheme of incentive 2013 for registration of Sale agreement (Industrial gala) for our small scale Industries located in Backward area. we want to confirm that the said agreemet is require to submit at collector of stamp, thane for adjudication before registration or direct effect to registration at office of the sub- registrar. Is adjudication is compulsory or no

  15. sunil kumar singh says:

    we have received certificate for exemption of stamp duty from office of the district Industries Centre, Thane under Package scheme of incentive 2013 for registration of Sale agreement (Industrial gala) for our small scale Industries located in Backward area. we want to confirm that the said agreemet is require to submit at collector of stamp, thane for adjudication before registration or direct effect to registration at office of the sub- registrar. Is adjudication is compulsory or not

  16. N.V.Ramana says:

    Dear Sirs,

    I request a clarification regarding the stamp duty for below proposed transaction :

    I am one of the directors of a pvt. ltd company in A.P. I wish to transfer some of my personnel property,a piece of agricultural land ( say a market value of 10 lacs) to this company. The company proposes to exchange some shares to me in consideration for this transaction.

    What would be the minimum stamp stamp duty chargeable in this connection.
    Regards

  17. jawaid says:

    Sir,
    I want to know about the minimum stamp duty to be paid on hypothecation deed. Also if there is a further charge in the hypothecation have we to pay the minimum stamp duty at that time also

  18. Farida says:

    I want to include investors clause in my agreement. I would like to know how I can do that. What I should put in the agreement to denote that I have added investors clause. I would also like to know if there are any tax implications if I include this clause. Any help in this regard is much appreciated.

    Thank you

  19. sunil says:

    Dear Sir,
    I rented my flat and made registered in Thane Mumbai,now my agreement is expiring soon . My agent is asking to renew the contract for another 11 months by making notrary is it ok or i should renew by making registered for another 11 months . Please advise . I am out of town and time left is very few days , my tenant is saaying he will be out of town for 45 days. He is asking he will do the notrary and in this case i am not required.

    Can i renew the contract after expiry of one month or so,if i need the same can be legally registered with no penalty.

    Please advise ,waiting for your reply.

  20. mythili says:

    suppose I(a company) am contracting with a lot of people. I want to keep the original stamp duty but the others also want the original, what is the procedure to provide them with legitimate duplicate copies.

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