This article delves into the topic of whether stamp duty will be charged on off-market transfers of securities, such as gifts and legacies, under the Indian Stamp Act 1899. It discusses the amendments brought through the Finance Act 2019 and the rules that came into effect on July 1, 2020. The aim of these amendments was to bring uniformity to stamp duty on securities across states and foster a PAN-INDIA securities market.
The Amendments in the Indian Stamp Act 1899 brought through Finance Act 2019 and rules made thereunder has come into effect on 01st July 2020 vide notification dated 30th March ,2020.
In order to bring in uniformity of the stamp duty on securities across states and thereby build a PAN-INDIA securities market , the Central Government after due deliberations and consultations with states , through requisite amendments in the Indian Stamp Act , 1899 and rules made thereunder has created the legal and institutional mechanism to enable state to collect stamp duty on securities market instruments at one place by a single agency (through Stock Exchange or Clearing Corporation authorized by it or by the Depository) on one instrument. A mechanism for appropriately sharing the stamp duty with relevant state Governments has also been developed which is based on the state of domicile of the buyer.
The following rates have uniformly adopted or to applied in the below said transaction:
| Instrument | Rate |
| Issue of Debenture | 0.005% |
| Transfer and Re-Issue of Debenture | 0.0001% |
| Issue of security other than debenture | 0.005% |
| Transfer of security other than debenture on delivery basis | 0.015% |
| Transfer of security other than debenture on non delivery basis | 0.003% |
| Derivatives: | |
| (i) Futures (Equity and Commodity) | 0.002% |
| (ii) Options (Equity and Commodity) | 0.003% |
| (iii) Currency and Interest Rate Derivatives | 0.0001% |
| (iv) Other Derivatives | 0.002% |
| Government Securities | 0% |
| Repo on Corporate Bonds | 0.00001% |
Now the question may arise whether stamp duty will be levied on Gift of shares/securities(off-market transfer of securities) by one person to another person by executing a Gift deed and Share Transfer Form.
That in order to get clarity we need to understand that Section 21 of the amended Act clearly indicates that stamp duty is to be collected on market value which is based on price or consideration involved.
Since price or consideration is not involved in gift or legacy transfer transactions , therefore in the literal interpretation of the Act and in my view ‘Stamp Duty is not payable on such transactions.
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Author- CS Niraj Kumar Jaideoka and can be contacted at [email protected].
Author Bio
The averment appears to be patently wrong. Section 21 of the Amended Act deals with valuation of securities and not with chargeability of duty. Further it speaks of average price or value of the subject security which is normative and not to the transaction price which is factual or subjective.