STAMP DUTY

Q. What is stamp duty? Why should duty be paid?

A.  It is a tax, similar to tax (VAT) and income tax collected by the government. Stamp Duty is payable under Section 3 of The Bombay Stamp Act, 1958. Different amount of Stamp Duty is payable for different type of documents as per Schedule-1 of The Bombay Stamp Act, 1958. Stamp Duty must be paid in full and on time. If there is a delay in payment of stamp duty, it attracts penalty. A stamp duty paid document is considered a proper and legal document and as such gets evidentiary value and is admitted as evidence in the court. Document not property stamped, is not admitted as evidence by the court.

Q. What is the penalty for the delayed payment of stamp duty?

A.  If stamp duty is not paid on time, it attracts penalty at the rate of 2% per month on the deficit amount of the stamp duty. However, maximum penalty can be 200% of the deficit amount of the stamp duty. Minimum penalty is Rs.100.

Documents lodged with the sab-registrar/collector of stamp prior to any amnesty scheme will attract a lump sum reduced penalty, as applicable under that amnesty scheme, as the case may be.

Q.  When is stamp duty payable?

A.  It is payable either before execution of the document or on the day of execution of document or on the next working day of executing such a document execution of a document means putting signatures on the document  by the persons who are party to the document. However, it is advisable to pay stamp duty before executing the document, for all practical purposes.

Q.  Who is liable to pay stamp duty?

A.  In the absence of any agreement to the country, the purchaser/transferee has to pay stamp duty or in case of exchange of properties, both parties have to bear stamp duty equally.

Q.  What are the documents on which stamp duty is to be paid?

A.  Under the Bombay Stamp Act, 1958, stamp duty is to be paid on all documents by which an right or liability is or purports to be created, transferred, limited, extended, extinguished or recorded but does not include a bill of exchange, Cheque, promissory note, bill of lading, letter of credit, policy of insurance, transfer of shares, debentures proxy and receipt, which is charged under Indian Stamp Act, 1899.