1462. Whether deduction of stamp duty under the section admissible on instrument not designated as instrument of gift

1. Section 18A as substituted by the Finance Act, 1982 with effect from April 1, 1983 is as under :

“Where any stamp duty has been paid under any law relating to stamp duty in force in any State on an instrument of gift of property, the assessee shall be entitled to a deduction from the gift-tax payable by him of an amount equal to the stamp duty so paid or one-half of the gift-tax payable, before making the deduction under this section, whichever is less.”

2. Instances have come to the notice of the Board where property is transferred by way of a registered instrument which is not designated as an instrument of gift but as a “family settlement” or by some other name or title. Such transfers may, however, be found to be in the nature of gifts assessable under the Gift-tax Act. A question has arisen as to whether when assessment is made in such cases to gift-tax, stamp duty paid would be deductible under section 18A.

3. The Board have decided in consultation with the Ministry of Law that irrespective of the designation or title of the instrument leading to gift of property, stamp duty paid thereon or any part thereof, as the case may be, would be allowable as deduction to the extent such stamp duty or part thereof is attributable to the gift charged to gift-tax.

4. In respect of certain transactions gift-tax is attracted on account of the declared consideration being less than the fair market value of the property transferred. In such cases, however, the stamp duty paid would not be deductible under section 18A since gift-tax is charged on the value over and above the stated consideration and on such excess value no stamp duty would have been paid.

Circular : No. 358 [F. No. 340/1/81-GT], dated 30-4-1983.

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