Professional Documents
Culture Documents
Indian Stamp Act, 1899
Indian Stamp Act, 1899
B L Vinay Bangalore
B.Com,. ACS
3/5/2012 1
3/5/2012
History
Indian postal systems for efficient military and governmental communications had developed long before the arrival of Europeans
3/5/2012
3/5/2012
3/5/2012
Stamps
3/5/2012
3/5/2012
E stamping
E-stamping is a computer based application and a secured electronic way of stamping documents.
3/5/2012
Franking Machine
3/5/2012
10
Constitutional validity
Union List, Entry 91 and State List, entry 63 confers power to prescribe the rates of stamp duties
3/5/2012
11
Important Terminologies
A Bill of Lading is a receipt by the master of a ship for goods delivered to him for delivery to X or his assigns. The term "conveyance" includes a conveyance on sale and every instrument by which property is transferred inter vivos1 and which is not otherwise specifically provided for by Schedule. It does not include a will
3/5/2012 12
Important Terminologies
An "instrument" to include every document by which any right or liability is, or purports to be, created, transferred, limited, extended, extinguished or recorded. Eg: leases, mortgages, promissory notes and wills Executed/Execution: Under Section 1(12), the words "executed" and "execution" (used with reference to instruments), mean "signed" and "signature" respectively (very imp because stamp duty need to be paid when docs are executed
3/5/2012 13
Important Terminologies
Bill Of Exchange: The Negotiable Instruments Act, defines a "bill of exchange" as an instrument in writing, containing an unconditional order signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of, a certain person or to the bearer of the instrument bill of exchange payable on demand
3/5/2012 14
Important Terminologies
Chargeable: Under Section 2(6) "chargeable" as applied to an instrument executed or first executed after the commencement of the Act means chargeable under the Act and as applied to any other instrument, chargeable under the law in force in India when such instrument was executed or where several persons executed the instrument at different times, first executed
3/5/2012 15
Important Terminologies
Toll is a tax paid for some liberty or privilege, such as for passage over a bridge, ferry, along a highway or for the sale of articles in a market or fair or the like. It does not include 'octroi' or 'chungi'
3/5/2012
16
Important Terminologies
Promissory Note: As defined by the Negotiable Instruments Act, 1881. It also includes a note promising the payment of any sum of money out of a particular fund which may or may not be available, or upon any condition or contingency which may or may not be performed or happen. [Section 2(22)]
3/5/2012 17
Important Terminologies
"Stamp" means any mark, seal or endorsement by any agency or person duly authorized by the State Government and includes an adhesive or impressed stamp for the purposes of duty chargeable under this Act. This definition of the stamp has been inserted by the Finance (No. 2) Act, 2004
3/5/2012 18
INSTRUMENTS CHARGEABLE WITH DUTY Section 3 of the Act is the charging section It provides that subject to the provisions of the Act and the exemptions contained in Schedule I, the following instruments shall be chargeable with a duty 1.every instrument mentioned in that Schedule 2.every bill of exchange, promissory note
3/5/2012 19
However, no duty shall be chargeable in respect of instrument executed by or on behalf of or in favour of the Government for the sale, transfer either absolutely or by way of mortgage or otherwise, of any ship or vessel registered under the Merchant Shipping Act, 1894 Any instrument executed by, or, on behalf of, or in favour of, the special Economic Zone
3/5/2012 20
EXTENT OF LIABILITY OF INSTRUMENTS TO DUTY A executed a conveyance of immovable property. On the same deed his nephew (undivided in status) endorsed his consent to the sale, as such consent was considered to be necessary. It was held that the conveyance was the principal instrument
3/5/2012
22
A lease is executed and got registered. A second document is executed altering the terms of the first document. The second document has to be stamped as a lease. Section 4 does not apply.
3/5/2012 23
There may be cases where an instrument may come under several descriptions in Schedule-I to the Act. In such a circumstance it is chargeable ONLY with the highest of such duties
3/5/2012
26
BONDS, DEBENTURES, ETC. ISSUED UNDER THE LOCAL AUTHORITIES LOAN ACT, 1879
It shall be chargeable with a duty of one percent on the total amount of the bonds, debentures or other securities issued by it
3/5/2012
27
3/5/2012
28
3/5/2012
29
Valuation for duty under the act According to Section 20, where an instrument is chargeable with ad valorem duty in respect of any money expressed in any currency other than that of India such money in the currency of India, according to the current rate of exchange on the date of the instrument.
3/5/2012
30
Section 21 provides that in the case of an 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 of such stock or security according to the average price or the value thereof on the date of the instrument.
3/5/2012 31
Slide 31 C3 Normally stamp duty will be paid on the face value of the security. Franking need to be done in Stock Exchange Library (BGSE)
COMPUTER, 10/11/2011
Valuation for duty under the act Where interest is expressly made payable by the terms of the instrument, interest should not be calculated for stamp duty
3/5/2012
32
3/5/2012
33
The consideration and all other facts and circumstances affecting the chargeability of any instrument with duty or the amount of duty with which it is chargeable shall be fully and truly set forth in the instrument. "Value of any property" would mean that real value of the property in the open market at the time the document was executed and not at the time when the executant acquired it.
3/5/2012 34
Apportionment
Section 28 prescribes certain rules for apportionment of the consideration, in cases of certain conveyances arising out of a property being contracted to be sold and thereafter conveyed in parts etc As the parties think fit Two or more purchases by one person, then each distinct part of the shall be chargeable with ad valorem duty
3/5/2012 35
Receipts
person receiving any money exceeding twenty rupees in amount/cheque or promissory note for an amount exceeding five hundred rupees or receiving in satisfaction of a debt give a duly stamped receipt for the same
3/5/2012
37
METHODS OF STAMPING
Stamp duty must be paid according to the provisions contained in the Act as the State Government concerned may by rule, direct as to description of stamps the number of stamps which may be used in the case of bills of exchange or promissory notes, the size of the paper on which they are written.
3/5/2012 38
Types of Stamping
Adhesive stamping, and Impressed stamping.
3/5/2012
39
3/5/2012
41
3/5/2012
42
Contd
b. Instruments executed outside India: every instrument chargeable with duty executed only out of India may be stamped within three months after it has been first received in India. The same be duly stamped Collector who shall stamp the same in such a manner as the State Government may by rule prescribe
3/5/2012 45
Contd
Where an instrument is brought to the Collector after the expiry of three months, the Collector may, instead of declining to stamp it, validate it, if he is satisfied that the omission to stamp in time was due to a reasonable cause. (remember limitation act)
3/5/2012
46
Adjudication as to stamps
a.Chapter III, consisting of Sections 31 and 32, deals with adjudication by the Collector, as to the proper stamp that an instrument has to bear. The provisions of this Chapter are intended to assist any party who is in doubt as to the proper stamp to be affixed. The Collector he shall determine the proper stamp duty on payment of a nominal fee
3/5/2012 47
Adjudication as to stamps
b. The Collector may require to be furnished with an abstract of the instrument or other evidence as he may deem necessary c. The duty of the Collector under Section 31 is only to determine the stamp duty payable upon the instrument. He is not authorised to impound the instrument or to impose any penalty if he comes to the conclusion that the instrument is not sufficiently stamped
3/5/2012 48
Adjudication as to stamps
d. When an instrument is brought to the Collector and the Collector is of the opinion that the instrument is already fully stamped, he shall certify by endorsement on such instrument, that the full duty (stating the amount) with which it is chargeable has been paid
3/5/2012
49
Contd.
Collector shall not make any endorsement where a. Any instrument is executed and brought to him after the expiration of one month b. any instrument is executed out of India and brought to him after the expiration of three months c. instrument chargeable with a duty not exceeding 10 naya paiseis brought to him after the drawing or execution thereof, on paper not duly stamped
3/5/2012 50
Pls read p.no 268 of the material An arbitrator has the consent of parties to adjudicate an arbitrator has a statutory duty under Section 33(1) to check whether the instrument so produced is duly stamped and if not, to impound the same
3/5/2012
52
UNSTAMPED RECEIPTS
An unstamped receipt produced in the course of an audit of any public account, the officer either to impound or to require the receipt to be stamped.
3/5/2012
53
where any person from whom a stamped receipt could have been demanded has given an unstamped receipt and such receipt, if stamped, would be admissible in evidence against him, on payment of a penalty of Re. 1/- by the person tendering it;
3/5/2012
55
where a contract or agreement of any kind is affected by the correspondence consisting of two or more letters and any one of the letters bears the proper stamp, the contract or agreement shall be deemed to be duly stamped
3/5/2012
56
nothing contained in Section 35 shall prevent the admission of any instrument in evidence in any proceeding in a criminal Court
3/5/2012
57
also nothing contained in Section 35 shall prevent the admission of any instrument in the Court, when such instrument has been executed by or on behalf of the Government
3/5/2012
58
3/5/2012
62
COLLECTOR'S POWER TO STAMP INSTRUMENT IMPOUNDED the Collector when impounding any instrument shall adopt the following procedure if he is of the opinion that instrument is duly stamped or is not chargeable with duty, he shall certify by endorsement thereon that it is duly stamped, or that it is not so chargeable as the case may be;
3/5/2012 63
3/5/2012
64
Contd..
In order to avail of the benefit of this section, the instrument must be produced before the Collector within one year of the date of its execution Where the instrument having been brought to the notice of the Collector within the period of one year, the Collector is in doubt regarding the amount of duty chargeable, he may refer the case to the Chief Controlling Revenue Authority and proceed in accordance with the decision of such authority
3/5/2012 66
3/5/2012
67
Contd
However no such prosecution shall be instituted in the case of any instrument in respect of which a penalty has been paid, unless it appears to the Collector that the offence was committed with the intention of evading the payment of proper duty. The Collector can initiate criminal proceedings if he sees reasons therefor.
3/5/2012 69
3/5/2012
70
3/5/2012
72
Condt... Condt...
III stamped paper in which an instrument has been executed, within six months after the date of the instrument, or if it is not dated, within six months after the execution thereof by the person by whom it was first or alone executed:
3/5/2012
74
UNUSED FORMS
Chief Controlling Revenue Authority or the Collector if authorised by the Chief Controlling Revenue Authority, to allow refunds in cases where refunds of stamps on printed forms used by bankers, incorporated companies/bodies corporate if required, if for any sufficient reasons such forms have ceased to be required by the said banker, company or body corporate (Eg: cancellation of `1,000 notes/cancellation of stamp papers for registration of properties etc.,)
3/5/2012 75
MISUSED STAMPS
Section 52 deals with allowance for misused stamps and applies to both impressed and adhesive stamps in the following instances: 1.When any person has inadvertently used, stamp of a description other than that prescribed or has inadvertently used any stamp for an instrument not chargeable with any duty
3/5/2012 76
Contd.
II. When any stamp used for an instrument has been inadvertently rendered useless The Collector may, on application made within prescribed time being restamped with the proper duty, cancel and allow as spoiled the stamp so misused or rendered useless. In such case the Collector may give in lieu thereof a. other stamps of the same description and value
3/5/2012 77
Contd.
stamps of any other description to the same amount in value at his discretion, the same value in money, deducting ten naya paisa for each rupee or fraction of a rupee. (Eg: Deducting money when DD is cancelled)
3/5/2012
78
DEBENTURES
When any duly stamped debenture is renewed by the issue of a new debenture in the same terms, the Collector shall, upon application made within one month, repay to the person issuing such debenture, the value of the stamp on the original or on the new debenture whichever shall be less. Provided that the original debenture is produced before the Collector and cancelled by him in such manner as the State Government may direct.
3/5/2012 79
Contd..
Such authority shall consider the case and send a copy of its decision to the Collector, who shall proceed to assess and charge the duty (if any) in conformity with such decision Chief Controlling Revenue Authority may with its own opinion thereon to the High Court and the same shall be decided by not less than three Judges of the High Court and the majority decision shall prevail.
3/5/2012
81
PROSECUTION
The Collector has got the power notwithstanding anything contained in the order of the lower court, to prosecute a person if any offence against the Stamp Act which he considers that the person has committed in respect of such an instrument. The prosecution is instituted when he is satisfied that the offence is committed with an intention of evading the proper stamp duty
3/5/2012 82
CRIMINAL OFFENCES
Sections 62 to 72 deal with penalties for offences. The provisions are as under: 1.Drawing, making, issuing, endorsing or transferring, or signing otherwise than as a witness or promissory note without the same being duly stamped; or 2.executing or signing otherwise than as a witness without the same being duly stamped
3/5/2012 83
Contd
3. voting or attempting to vote under any proxy not duly stamped shall, for every such offence, be punishable with fine which may extend to five hundred rupees
3/5/2012
84
Contd
Any person required by Section 12 to cancel an adhesive stamp, and failing to cancel such stamp. shall be punishable with fine which may extend to one hundred rupees (Section 63). The criminal intention is necessary for an offence under this Section
3/5/2012
85
Contd
As per Section 64, any person who, with intent to defraud the Government a. executes any instrument in which all the facts are not fully and truly set forth b. being employed in or about the preparation of any instrument, neglects or omits fully all such facts and circumstances; c. does any other Act calculated to deprive the Government of any duty or penalty under this Act Here also, an intention to evade payment of proper stamp duty or intention to defraud the Government of its stamp revenue is necessary.
3/5/2012 86
Contd
Any person who being required to give a receipt, refuses or neglects to give the same with intent to defraud the Government shall be punishable with fine which may extend to one hundred rupees
3/5/2012
87
Contd
Any person shall be punishable with fine which may extend to Rs. 200/- if he a. receives, or takes credit for any premium or consideration for any contract of insurance and does not, within one month make out and execute a duly stamped policy of such insurance; b. makes, executes or delivers out any policy which is not duly stamped
3/5/2012 88
Contd.
A Magistrate other than a Presidency Magistrate or a Magistrate whose powers are not less than those of a Magistrate of the second class, shall try any offence under this Act
3/5/2012
90
MISCELLANEOUS PROVISIONS
Chapter VIII, containing Sections 73 to 78 deals with supplemental provisions regarding inspection of relevant registers, books, records, etc; to enter the premises for that purpose, powers of Government to frame rules for the sale and supply of stamps and to make rules generally to carry out the provisions of the Act.
3/5/2012 91
SCHEDULE
The Schedule to the Stamp Act prescribes the rates of stamp duties on instruments
3/5/2012
92
Questions
3/5/2012
93
3/5/2012
94