Everything you wanted to know about Stamp Duty
Q. 1. What is the bombay stamp Act,1958?
The Bombay Stamp Act, 1958 comes into force on 16th February, 1959 and is applicable in the State of Maharashtra. This Act is intended to levy Stamp duty on certain types of documents executed in the State or brought from outside for acting upon the same in the State. The various instruments/documents are broadly covered under different 62 articles listed in Schedule-I appended to the Act. The rates at which stamp duty is levied on these documents are mentioned in Schedule �I. The Bombay Stamp Act, levies Stamp duty on documents/instruments by which any right or liability is, or purports to be, created, transferred, limited, extended, extinguished or recorded. The stamp duty is payable on instrument and not on the transactions.
Q. 2. What is Stamp Duty ?
It is a type of tax which is paid for the transaction performed by way of document or instrument under the provisions of Bombay Stamp Act, 1958 and Indian Stamp Act, 1899.
Q. 3. Whether Stamp duty is payable on transactions or on instruments?
It is payable on instruments and not on transactions. The definition of the term instrument is very wide.
Q. 4. What is instrument ?
Instrument means any document by which any right or liability is, or purports to be, created, transferred, limited, extended, extinguished or recorded.
Q. 5. What is document ?
As defined in Evidence Act, document means only matter expressed or described upon substance by means of letters, figures or marks or by more than any of those means intended to be used or which may used for the purpose of recording that matter.
Q. 6. Why Stamp Duty has to paid on document/instrument ?
The payment of proper Stamp duty on instruments bestows legality on them. Such instruments get evidentiary value and are admitted in evidence in Court of law. The instruments which are not properly stamped are not admitted in evidence .
Q. 7. Which provisions/ Articles of Indian Stamp Act, 1899 attracts Stamp duty in the state of Maharashtra ?
The following Articles of The Indian Stamp Act, 1899 attract Stamp duty in the state of Maharashtra
Article No. Description of instrument.
13 Bill of Exchange
14 Bill of Lading
37 Letter of Credit
47 Policy of Insurance
49 Promissory Note
Q. 8. What is meant by execution of instruments?
Execution means putting signatures on the instruments by the person/persons executing the instruments.
Q. 9. How Stamp Duty is calculated.?
Broadly the 62 articles of Schedule I are grouped in three categories.
Category i) Articles whose amount of Stamp duty is fixed irrespective of the value mentioned in the document / instrument. ( Viz. Administration Bond, Adoption deed, Affidavit, Divorce, Appointment in execution of power , Apprenticeship deed, Article of clerkship, Award, Cancellation deed, Charter party, Duplicate, Copy of Extracts, Entry of Memorandum of Marriage, Indemnity Bond, Letter of license, Memorandum of Association of a company, Notarial Act, Power of attorney, etc.)
Category ii) Articles where depending upon the value mentioned in the document, the amount of stamp duty is varied. (Viz. Agreement relating to deposit of title deeds, pawn, pledge or hypothecation, Clearance List, Lease , Article of association, Mortgage deed, Security Bond, etc.)
Category iii) Articles which attracts Stamp duty on the consideration mentioned in the document or True Market Value, whichever is higher. ( Viz. Conveyance, Agreement for sale, Gift, Exchange,Partnership Deed,Partition, Development Agreement, Transfer, Trust, etc.)
For category I and II types of instruments the Stamp duty payable can be ascertained by referring to the Schedule I; but to ascertain the Stamp duty on the instruments mentioned in Category III, the expertise in valuation is required. The True Market Value is determined as per the provision of the Bombay Stamp ( Determination of True market value of the property ) Rules, 1995.
Q. 10. What point of time of Stamp Duty payable. ?
The Section 17 & 18 of the Act states the time of payment stamp duty. Generally all the instruments executed in the state shall be stamped before or at the time of execution or immediately thereafter or on the next working day following the day of execution. Similarly, the instruments which is executed out of the state and within three months from its receipt in the state, shall be stamped.
Q. 11. How is Stamp Duty payable?
Stamp Duty can be paid by
1. Using Stamp paper
2. Using adhesive stamps
Q. 12. Who is liable to pay Stamp Duty ?
As per the provisions of Section 30 the onus of payment of Stamp duty in the absence of an agreement to the contrary, shall be borne by the executing in the manner provided their with respect of certain kinds of documents viz. Mortgage deed, release, security bond, settlement, bond etc. in the case of conveyance, the grantee and lease the lessee shall pay the stamp duty in the case of exchange of property, both the parties in equal share shall pay stamp duty. In case of partition, the parties thereto in proportion to their respective shares should pay stamp duty.
Q. 13. What is meant by adjudication of instruments? Which authority is to be approached for adjudication of instruments ? What is the amount of fees required to be paid for adjudication? What documents are to be enclosed while submitting application for adjudication ?
Section 31, of Bombay Stamp Act, 1958 deals with the adjudication of the instruments. Adjudication means determining the chargeability of stamps duty on instruments. The authority to be approached is the Collector of Stamps appointed in each District. Application for adjudication should be accompanied by � true copy or an abstract of the instrument and also with such affidavit or other evidence as may be necessary to prove that all facts affecting the chargeability of the instrument have been truly setforth in the instrument along with the proof of payment of Rs. 50/- as adjudication fee. Adjudication can be done both for signed as well as unsigned documents.
Q. 14. How to pay Stamp Duty ?
The Document which is chargeable with Stamp duty can be prepared on the non-judicial Stamp paper of appropriate value. Unexecuted document can be got franked with special adhesive Stamps by Franking Machine intended for stamping such documents, by tendering required amount in the office of collector of Stamps whereever this facility is available. When documents is lodged for adjudication, on receiving intimation as to the amount of Stamp duty payable by tendering appropriate amount equal to the amount of Stamp duty and penalty if any, the Collector of Stamp shall certify the document as to the payment of proper duty.
Q. 15. What is the validity of Stamps ?
As per the provisions of Section 52-B, the stamps which are purchased and not used within six months shall be rendered invalid thereafter. The stamps purchased and not used for intended purpose are entitled for refund after deduction of certain charges, if lodged for refund within six months from the date of purchase and on fulfilling the conditions stipulated in Chapter V of the Bombay Stamp Act, 1958.
Q. 16. What are the consequences of not paying Stamp duty?
The documents if not duly stamped, shall not be admissible in evidence in the court of law. As per the provision of Section 59, any person who, with the intention to evade the Stamp duty, executes or signs any instruments chargeable with stamp duty, without the same being duly stamped, shall on conviction, be punished with rigorous imprisonment for � term which shall not be less than one month but which may be extended upto six months and fine upto Rs. Five Thousand. The Section 67 and 68 empowers the authorities to enter upon any premises and to inspect and impound/seize the documents which are not duly stamped and burden is casted upon every public officer to assist the authorities in detection of evasion. The documents impounded for want of proper duty, attracts penalty @ 2 % per month from the date of execution of such document.Miscellaneous
Q. 17. In whose name the stamps are required to be purchased ?
The stamps are required to be purchased in the name of one of executors to the instrument.
Q. 18. What happens if the instrument is executed on stamps which does not bear the name of one of the executors.?
Such instruments are not admitted in evidence, for any purpose. These instruments are also treated as not properly stamped. These instruments are liable to be impounded and sent to the Collector of Stamps for recovery of proper stamp duty.
Q. 19. What are the rates of Stamp duty on instruments relating to transfer of immovable property.
The rates of stamp duty on instruments relating to transfer of immovable property vary from place to place. The rates are specified in Article 25 of Schedule 1 appended to the Bombay Stamp Act, 1958. However, Article 25(d) which deals with the instruments of transfer of residential premises in � Co-operative Housing Society or where the provisions of Maharashtra Ownership Flats Act 1963 and the Maharashtra Apartment Ownership Act, 1970 apply, provides for levy of concessional rates of Stamp duty. In areas, where the provisions of the aforesaid Acts apply, residential premises upto � market value of Rs. 1,00,000/- attract such concessional rates. Instruments relating to the transfer of residential premises of market value of more than Rs. 1,00,000/- attract normal rates of stamp duty for values over and above Rs. 1,00,000/- as applicable in that area. Such normal rates are 8 %, 6%, 3 %, 5 %. Etc. depending on where the property is situated.
Q. 20. Whether any penalty is levied in cases referred to the Collector by the Sub-Registrar for determination of true market value of the property where the Collector comes to the conclusion that the true market value of the property was not stated in the instrument ?
In addition to recovery of deficit Stamp duty in such cases, the concerned party is required to pay penalty of Rs. 250/- plus 15 % interest for each year or part of the year on the deficit amount from the date of presentation of instrument before the Sub-Registrar.
Q. 21. What remedy is available to the parties, in case they do not agree with the true market value of the property as determined by Collector of the District ?
The parties can go in appeal to the Chief Controlling Revenue Authority, Maharashtra State, Pune. under section 32 B of Bombay Stamp Act, 1958.
Q. 22. Is the chargeability of stamp duty determined by the Collector of stamps in adjudication final ? Can a person go in an appeal against the order passed by the Collector of Stamps ? Is there any time limit for filing the appeal ?
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, Maharashtra State, Pune as provided in section 53 of the Bombay Stamp Act, 1958, limit prescribed for the filing of an appeal is within 60 days.
Q. 23. Why do the authorities insist on disclosure of relevant facts and circumstances to be fully and truly set forth in the instrument ?
Section 28 of the Bombay Stamp Act, 1958 casts the duty on the executants to disclose and truly set forth relevant facts and circumstances in the instruments. This helps in finding out the types of transactions involved in the instruments which in turn helps in the determination of proper stamp duty payable on such instruments. Duty is not payable on the title or the heading given on the top of the instrument but on the recitals as stated in the instruments.
Q. 24. Can there be refund of Stamp duty in case if the Stamp paper is unused or multiliated?
Yes, Refund can be claimed v/s 47 of The Bombay Stamp Act 1958. However such claim can be made to the collector of Stampswithin a period of 6 months from the date of purchase of Stamps
Q. 25. What is meant by impounding of instruments ?
Every person having by law or consent of parties authority to receive evidence and every person in charge of a public office before whom any instrument chargeable with stamp duty is produced or comes in the performance of his functions. Shall if it appears to him that instrument is not duly stamped, impound the same, irrespective whether the instrument is not valid in law. Such impounded document is required to be forwarded to the Collector of Stamps for recovery of deficit stamp duty in addition to penalty at the rate of 2 % per month .
Q. 26. As the cost of flat is required to be paid in installment as per agreement whether the stamp duty can be recovered in part at the time of payment of such installments instead of making full payment at the time of entering into the agreement ?
No. Stamp duty cannot be paid in settlements, Various chambers Associations have made suggestions and representations to the stamp authorities in this regard. However till date no effort is made by the Stamp authorities towards implementation of the same.
Q. 27. In case where the builder sells a flat to an individual in a building where the society is not formed and the document is not stamped and the individual resells the flat to another persons who pays the stamp duty. The builder confirms the said agreement and thereafter the society is formed. The purchaser becomes � member of � society. Whether the original purchaser in future will be liable to pay stamp duty and whether stamp duty can be charged on the flat and whether the first purchaser can be forced to pay the stamp duty by the Government or it will be have to be borne by the second purchaser again who is the present owner of the flat. ?
The original purchaser will be liable to pay stamp duty on the fair market value prevalent at the date of the document as determined by the Stamp authorities as stamp duty is paid on each transaction. However, the reply is subject to the confirmation of the Hon able Supreme court of India. In the question under consideration in my opinion person is responsible to pay stamp duty on only his own purchase transaction and hence the second purchase in my opinion will not be liable to pay the unpaid stamp duty of the first purchaser.
Q. 28. On what basis ( Carpet, Built-up or Super built-up ) are the rates fixed by the stamp authorities ?
For the purpose of determination of True Market Value, the Built-up area is taken into account.
Q. 29. Will stamp duty have to be paid if there is a deed of family settlement and a flat is transferred amongst family members ?
Yes. As per the provisions of Bombay Stamp Act, Stamp duty will have to be paid on a deed of family settlement.
Q. 30. Will stamp duty have to be paid if the flat is gifted by a donor ?
Yes. Stamp duty will have to be paid if the flat is gifted by the donor.
Q. 31. Is the decree of final order of a civil court by which immovable property is transferred be liable to be stamped as a conveyance ?
Yes, After the amendment of Article 25 of the Bombay Stamp Act. The definition of conveyance has been widened, in view of the amendment decree or final order of the court by which immovable property is transferred is liable to be stamped as a conveyance.
Q. 32. In case of resale of the flat who has to pay the Stamp duty, the purchaser or the seller ?
The parties can themselves decide who shall pay the stamp duty. If nothing is mentioned in the agreement then as per section 30 of the Bombay Stamp Act, 1958 if the transaction relates to resale of flats then the stamp duty will have to be paid by the purchase.
Q. 33. Are orders made by the High court under section 394 of the Companies Act, 1956 in respect of amalgamation of companies be liable for payment of stamp duty as on a Conveyance ?
Yes, after the amendment made in 1993, the preview of Article 25(d) has been widened so as to bring orders made by the High Court under section 394 of the Companies Act, 1956. In respect of amalgamation of companies. Therefore stamp duty as on a Conveyance will have to be paid on such orders.
Q. 34. In whose name should the stamp paper be purchased. ? Can the client execute the document on a stamp paper purchased by an Advocate ?
As per section 34 of the Bombay Stamp Act, 1958 the stamp papers should be in the name of one of the parties who has signed the documents. Therefore the stamp paper should be purchased in the name of one of the parties who would be signing the instruments. If the stamp paper has been purchased in the name of an Advocate, C.A., etc than such instrument shall be treated as an instrument not duly stamped and shall be inadmissible in evidence