OVERVIEW OF STAMP ACT
Indian Stamp Act was amended in 1899 by the British
Government with the sole purpose of acting as a revenue-
generating mechanism for the Government.
imposes liability to pay stamp duty on certain and specific
documents.
Stamp Duty
Basically, stamp duty is a tax which is paid on the exchange of
documents or execution of instruments.
There are basically two kinds of stamp duty and they are:
1. Impressed stamp - An impressed stamp is produced by the
process of engraving or embossing. The labels in impressed
stamps are affixed and these impressions are done by franking
machines in the bank.
2. Adhesive stamp - Adhesive stamps are those stamps which
can be stuck to a document using any form of adhesive. There
are two types of adhesive stamps and they are:
a. Postal stamps- Postal stamps have their limited application.
Postal stamps are used for post office related transactions.
b. Non-postal stamps- non-postal stamps have wider
application compared to postal stamps. Non-postal stamps are
revenue stamp, court fee stamp, insurance policy stamp etc.
There are certain very important terms that are related to The
Indian Stamp Act, 1899.
Conveyance- Section 2 (10) of the Act defines the term
conveyance.
Duly Stamped- Section 2 (11) defines this term.
Instrument- Section 2(14) defines the term instrument.
Valuation of Instrument for levy of stamp duty
As we already know that Instruments are chargeable with duty
but then it raises another question and that is how is the
valuation of instruments is done, the answer to that question is
from Section 20 to Section 27 excluding Section 22 of The
Indian Stamp Act.
Section 20 of the Act states that where an instrument is
chargeable in respect of money in any currency other than that
of India then, in that case, the duty shall be calculated on Indian
currency and the exchange rate shall be applicable on the date
of the instrument.
Section 21 provides that where an instrument is chargeable
with ad valorem duty in respect of stock, securities then, in that
case, the value of the day is calculated by the average price of
the stock or security in the day of the instrument.
Section 23 deals with interest, it states that where interest is
payable by the terms of an instrument in such a case the value
of the duty shall not exceed the charge by which it would have
been initially chargeable.
Section 24 states that duty is also payable on the amount of
debt when a property is transferred wholly or partially.
Section 25 talks about the computation of duty in the case of
annuity
Section 26 states that where the instrument is chargeable with
ad valorem duty but the value of the subject matter cannot be
ascertained at the date of its execution, then, in that case, the
executants can value the instrument as they please. However,
they cannot recover under such a document any amount which
is more than the amount of stamp duty that has been paid.
Section 27 sets that parties of an instrument are bound to set
forth all the facts and circumstances affecting the chargeability
of an instrument.
By whom stamp duty is payable
Section 29 of the Indian Stamp Act provides for the person who
is liable to pay the stamp duty.
1. Administration bond agreement, pawn agreement, pledge
agreement, bills of exchange, bonds- In such instruments the
person who is drawing, making, or executing such
instrument is liable to pay the stamp duty.
2. Lease agreement or agreement to lease- In such
instruments, the lessee or the intended lessee is liable to pay
the stamp duty.
E-Stamp
Through modernisation, there has been an introduction of E-
stamp or as known as an electronic stamp. E- stamp is
basically an electronically generated stamp which can be
used as a non-judicial stamp and can be used to pay stamp
duty to the government.
Benefits of E-stamp
1. E-stamps are less time-consuming.
2. They are very easily accessible.
3. They are cost saving.
4. E-stamps are user-friendly.
What are the notable provisions of the draft Bill?
The draft Bill introduces provisions for digital e-stamping,
defined as an electronically generated impression indicating
the payment of stamp duty.
It also includes provisions for digital signatures, with the
terms “executed” and “execution” now encompassing
electronic records and signatures as per the IT Act, 2000.
The IT Act defines “electronic records” as data, images, or
sounds in an electronic form, and digital signatures as the
authentication of any electronic record.
The draft Bill also proposes increased penalties, raising the
maximum penalty from Rs 5,000 to Rs 25,000 for violations,
and imposing a daily fine of Rs 1,000 for repeated offences.
