indian stamp act roy chowdhury.pdfstamp act - an overview • some states like gujarat, maharashtra,...

Indian Stamp Act

Presented by: Shri Santi Kr. Roychowdhury

Dy. Inspector General of Registration (H.Q.) Directorate of Registration & Stamp Revenue

Finance (Revenue) Department, West Bengal

Stamp Act - An Overview

• The Stamp Act is a fiscal statute dealing with tax on transactions.

• The tax is levied in shape of stamps on instruments recording the transactions. This form of taxation has been criticized by many as unsound and uneven in incidence but it has been found to be convenient for collection and supervision.

• The law is mostly modeled on English Law. English decisions have furnished valuable guidance in the matter of administration of the law in India.

• In the past century, a considerable body of Indian case law has accumulated. The numerous rulings of the Revenue Boards also form useful precedents.


• The revenue derived from such duties forms a considerable part of the revenue of the State.

• Under the Constitution, the entire proceeds of the duties are assigned to the State in which they are levied.

• In our state, revenue collected in the shape of stamp duties and registration fees is the second highest, after the commercial taxes.

• With regard to the instruments of commercial nature, the power to prescribe the rates of duties is vested in the Union Legislature (entry 91 of the Union List) and the power to reduce and remit such duties is vested with the Central Government.


• The power to prescribe the rates of duties on other instruments is vested in the State legislature (entry 63 of the State List) or reduce such duties is vested in the State Government.

• All matters relating to the mechanism of collection and management of stamp duties in respect of both the classes of Instruments are the subject of entry 44 of the Concurrent List.

• The act was originally enacted in 1899 and the Indian Stamp Act, 1899 is in force in the whole of India except the State of Jammu and Kashmir.


• Some states like Gujarat, Maharashtra, Karnataka and Kerala have the separate acts enacted about them.

• National Institute of Public Finance & Policy is an institute, headed by the Principal, Dr. Mathur, for the State Secretaries of Stamps.

• The body has drafted a new Indian Stamp Act which is under active consideration of the Union Ministry of Finance.

• If the said bill is enacted a new act will come into force for all the States.


• In the proposed act, some sections have been introduced, some new sections have been newly framed according to the changed scenario and some sections have been modified.

• But the spirit remains the same.

Stamp Act - The Preamble

In the preamble it is stated :- • "Whereas it is expedient to consolidate and amend the

law relating to stamps, it is hereby enacted as follows:“

• It shows that it is not only an amending Act but also a consolidating Act.

• The Stamp Act is exhaustive and indicates that all the former Acts on the subject of Stamps have been collected.

• There are 78 sections in the Act and Schedule 1A has 65 articles for determining rates of stamp duties on 65 types of instruments.

Stamp Act - The Definition

• This gives the definitions of the terms used in the Act. The interpretation of terms contained in this section are useful only for the purpose of this Act.

• Section 2(a) – Collector – means within the limits of the toms of Calcutta, Madras

and Bombay, the Collector of Calcutta, Madras and Bombay respectively and without those limits , the Collector of a district and

– includes a Deputy Commissioner and any Officer whom the State Government may, by notification in the Offlcial Gazette, appoint in this behalf.


– All registering officers have been declared Collector u/s 41 and 42, uh.16 in our State.

– DIGR have been declared Collector under sec. 47A of the I.S. Act, 1899. Different states different sections

• Section 2 (12) - 'Executed' and 'execution' used with reference to instruments mean "signed"' and "signature". The term 'execution. – When applied to a document is the last act or series of

acts which completes it. Thus execution of deeds is the signing, sealing and delivery of them in the presence of witnesses.


• 2(11) "Duly Stamped" means that the instrument bears an adhesive or impressed stamp of not less than the proper amount and that such stamp has been affixed or used in accordance with the law for the time being in force in India.

• 2(14) "Instruments" includes every document by which any right or liberty is or purports to be created, transferred, limited, extended, extinguished or recorded.

• 2(21) "Power of Attorney" includes any instrument empowering a specified person to act for and in the name of the person executing it.

Stamp Act - The Definition • 2(24) "Settlement" means any non-testamentary

disposition in writing of movable or immovable property made – – in consideration of marriage – for the purpose of distributing property of the settler among

his family or those for whom he desires to provide or for the purpose of providing for some persons dependent on him or

– for any religious or charitable purpose and includes an agreement in writing to such a disposition

Stamp Act - Section 3

• every instrument mentioned in Schedule 1A, which, not having been previously executed by any person, is executed in India on or after the first day of July,1899

• every bill of Exchange payable otherwise than on demand or promissory note drawn or made out of India on or after that day and accepted or paid or presented for acceptance or payment or endorsed, transferred or otherwise negotiated in India, and


• every instrument mentioned in schedule 1A which previously not having been executed by any person, is executed out of India on or after that day relates to any property situated, or any matter or thing done or to be done, in India and is received in India - shall be chargeable with duty of the amount indicated in the Schedule, as the proper duty there for; provided that no duty is chargeable in respect of – any instrument executed by or on behalf of or in favour of

the Government in cases where, but for this exemption, the Government would be made liable to pay the duty chargeable in respect of such instrument


• Instruments not mentioned in the schedule are not subject to duty.

• Wills are not subject to duty because there is no mention of them in Schedule. A decree of a court in terms of an award is not an instrument chargeable with stamp duty nor petitions and compromises and solenamahs filed in court. But Award affecting partition is chargeable with duty.

Stamp Act - Section 4 & 9

• Section 4 – – While several instruments used in single transaction of

sale, mortgage or settlement, the principal instrument only shall be chargeable with the duty. The parties will determine which will be the Principal Instrument, the duty chargeable on the instruments shall be the highest duty.


• Section 9 –

• Power to reduce, remit or compound duties :-

• The Government may by rule or order published in the Official Gazette – – reduce or remit, whatever prospectively or retrospectively,

in the whole or any part of the territories under its administration, the duties with which any instrument or any particular class of instrument or any of the instruments belonging to such class or any instruments when executed by or in favour of any particular class of persons or by or in favour of any member of such class are chargeable.


– Provide for the composition or consolidation of duties in the case of issues by any incorporated company or other body corporate or debentures, bonds or other marketable securities.

• In this section Government means Union Government for Union List and State Government for State List


• Section 11 – • Adhesive Stamps may be used for

– (a) Bill of Exchange and promissory note drawn out of India – (b) Entry as an advocate, vakil or attorney on the roll of a High Court – (c) Notarial acts; and

– (d) Transfers by endorsement of shares in any company or other body corporate

– Adhesive stamp used should be cancelled under section 12


• Section 27 –

• The market value or the consideration (if any) and all other facts and circumstances affecting the chargeability of any instrument with duty or the amount of the duty with which it is chargeable, shall be fully and truly set forth therein in – not done punishable under section 64 of this Act


• A deed of Gift which contains no statement of the value of the property gifted does not require stamp duty as per language of Article 33, but the omission to set forth the value is a contravention of section 27 and a prosecution will lie against the person who executed the document under section 64 of the Act, if it is to be found that there was an intention to defraud the Government.


• Section 29 :-

• In absence of an agreement to the contrary the expense of providing the proper stamp shall be borne by such persons as mentioned in the section :- – Bond, Debenture, mortgage, release, settlement etc. by

the person drawing, making or executing such instrument – conveyance- by purchaser – lease - by lessee – exchange by parties in equal shares – partition - by the shares there to in proportion to their

respective shares


• This section is not exhaustive and makes no reference to several instruments.

• An agreement to bear the costs of preparation of an instrument implies an agreement to pay stamp duty also on it.


• Section 31 –

• Adjudication as to proper stamp

• Any instrument, executed or not, stamped or not , may be brought by any person for the opinion of the Collector as to the duty with which the instrument is chargeable - A fee not exceeding Rs.5.00 is to be paid for such adjudication. The Collector shall determine the duty, with which, in his judgement, the instrument is chargeable. – Collector may require an abstract copy of the document – Affidavit or other evidence to prove that section 27 is

complied with


• After adjudication, the Collector shall certify by endorsement on such instrument that the full duty with which it is chargeable has been paid. – when not chargeable, the Collector shall certify accordingly – endorsement made by Collector shall be deemed to be

duly stamped


• Nothing in this section shall authorize the Collector to endorse – if the document, when executed in India, is brought after

one month of execution – if the document, when executed out of India, is brought

after three months after it has been first received in India.


• The opinion of the Collector of stamps with regard to valuation of stamp duty is only tentative, which is subject to its acceptance or rejection by the court after a regular trial. A mere letter from the Collector expressing his opinion that no stamp duty was necessary is not a certificate which is contemplated by section 32(2) and hence is not binding or conclusive in the court.

• When after payment of stamp duty, certificate is endorsed on the instrument, the certificate is conclusive and there shall be no further objection as to the stamp duty of that document.

• Even the Collector cannot review his decision and cancel or modify his endorsement once made on instrument


• Examination and Impounding of Instruments

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

• Exemption - – ( i ) Magistrate or judge of criminal court – ( ii) In case of Judge of High Court, power is delegated to such officer of court.


• State Govt. may determine what office will be the Public Office W.B. Amendment in 1990:

• Collector can also impound when brought to him u/s 31 but not the document which is not executed.

• Collector may suo moto call for original instrument when deficiency is noticed from any copy of the same document.

• Documents must be produced or comes "in performance of his function" not otherwise.

Stamp Act - Section 35, 38, 41, 42, 43, 47A

• Section 35- • Instruments not duly stamped inadmissible in evidence

• Section 38- • Instruments impounded how dealt with

• After collection of deficit stamp duty and payment of

penalty an authenticated copy/original of the document shall be sent to the Collector

• The penalty to be levied by court is ten times the deficient stamp duty subject to a minimum of Rs.5. the Collector may refund the penalty in excess of Rs.5.00 under sec.39


• Section 41 –

• Instruments unduly stamped by accident

• If any document is produced by any person of his own motion before the Collector within one year from the date of its execution or first execution and the person offers to pay the stamp duty and the Collector is satisfied that the omission is occasioned by accident, mistake or urgent necessity will receive the deficit stamp duty and will not proceed u/s 33.

• In different states including West Bengal, Registering Officers are the Collector under this section.


• Section 42 –

• Endorsement of Instrument on which duty has been paid under section 3 5,40 and 41

• Section 43 –

• Prosecution against stamp law :

• No prosecution unless it appears to the Collector that the offence was committed with the intention of evading of proper duty.

Stamp Act - 47A & 49

• Section 47A –

• Almost every State has amended this section introducing market value. – West Bengal Amendment :-

• Agreement to sale • Conveyance • Exchange • Gift


• Partition • Power of Attorney

– Given for consideration • Settlement • Transfer of lease by way of assignment

• Prevention of Under-Valuation of Instruments Rules,

2002

• 47B - Appeal


• Section 49 –

• Allowances for spoiled stamps – Collector may make allowances for spoiled impressed

stamps

– Time for application in section 50

– Stamp on any paper inadvertently and undesignedly spoiled, obliterated or by error in writing or by any other means rendered unfit for the purpose intended before any instrument written thereon is executed by person


– Stamp on any document which is written out wholly or in part but not executed

– Afterwards found void in law

– Found unfit by reason of any error or mistake

– By reason of death of the person by whom it required to be executed

– Refusal of any person to execute

Stamp Act - 50, 52, 53, 54, 55 & 56

• Section 50 – – Application when to be made :-

a.in some case two months b.within six months after the stamp has been spoiled

• Section 52 –

– Allowances for misused stamps • Stamp of a description other than that prescribed for

instrument • A stamp of greater value than was necessary Collector

may cancel or allow as spoiled and misused

Stamp Act - 50, 52, 53, 54, 55 & 56

• Section 53 – Allowances for spoiled and misused stamps • By other stamps of same description • Stamp of any other description of same amount • Same value in money

• Section 54 – Allowance for stamp not required for use • Not for immediate use

– Collector's satisfaction as to • Purchased by the person with a bonafide intention to

use them • That the full price is paid • Within six months

• Section 55 & 56 – Chief Controlling Revenue Authority

Stamp Act - 62, 63, 64, 69, 70, 71, 74

• Section 62 – – Penalty for executing instruments not duly stamped

• Section 63 –

– Penalty for failure to cancel adhesive stamp

• Section 64 – – Penalty for omission to comply with provision of section 27

• Section 69 –

– Penalty for breach of rule relating to sale of stamps and for unauthorized Sale

Stamp Act - 62, 63, 64, 69, 70, 71, 74

• Section 70 – – Sanction of Collector or such other Officer authorized by

State Govt. – Chief Controlling Revenue Authority or any officer

authorized

• Section 71 – – Presidency Magistrate – Second class magistrate have the jurisdiction for such trial

• Section 74 –

– Power to make rules relating to sale of stamps

Thank You