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The Indian Stamp Act of 1899 was established to generate revenue for the government by imposing stamp duty on specific documents, making them legally valid. It outlines chargeable instruments, exemptions, and rules regarding multiple instruments in transactions, as well as the examination and admissibility of unstamped instruments. Key provisions include penalties for non-compliance and the authority of the Collector to manage improperly stamped instruments.

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Khushi Periwal
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2 views

Module-19

The Indian Stamp Act of 1899 was established to generate revenue for the government by imposing stamp duty on specific documents, making them legally valid. It outlines chargeable instruments, exemptions, and rules regarding multiple instruments in transactions, as well as the examination and admissibility of unstamped instruments. Key provisions include penalties for non-compliance and the authority of the Collector to manage improperly stamped instruments.

Uploaded by

Khushi Periwal
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Indian Stamp Act, 1899

The 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. This Act imposes liability to pay
stamp duty on certain and specific documents. The Indian Stamp Act acts as fiscal legislation.

 Objectives of the Stamp Act, 1899


o The main purpose of this Act is to generate revenue for the Indian government.
o A document that is stamped acts as valid evidence in a court of law.
o The Stamp Act also makes payment of stamp duty on some documents compulsory,
which in return makes those documents legally valid and authentic.

Instruments Chargeable with Duty – SECTION 3


Subject to the provisions and exemptions within the Act and Schedule I, certain instruments are
chargeable with duty based on the indicated amount in Schedule I. The following points summarize
the chargeable instruments and exemptions:

Chargeable Instruments:

1. Instruments Executed in India (Post-1899):


o Every instrument listed in Schedule I that is executed in India on or after July 1,
1899, and was not previously executed by any person, is chargeable with duty.
2. Bill of Exchange (Payable Otherwise Than on Demand) & Promissory Notes:
o Bills of exchange (payable other than on demand) or promissory notes that are drawn
or made outside of India on or after July 1, 1899.
o If these are accepted, paid, presented for acceptance or payment, endorsed,
transferred, or otherwise negotiated in India, they are subject to duty.
3. Other Instruments Executed Outside India:
o For any instrument (other than bills of exchange and promissory notes) listed in
Schedule I, executed outside India but relating to:
 Property located in India, or
 Any matter, action, or duty performed or to be performed in India, duty is
applicable if the instrument is received in India.

Exemptions:

1. Instruments Involving the Government:


o No duty is chargeable on instruments executed by or on behalf of the Government, or
in favor of the Government, in cases where the Government would otherwise be
liable to pay the duty.
2. Ship or Vessel Transfers:
o Instruments related to the sale, transfer, or disposition (including mortgages) of any
ship or vessel, or any part, interest, share, or property in a ship or vessel, are exempt
if registered under:
 The Merchant Shipping Act, 1894,
 Act XIX of 1838, or
 The Indian Registration of Ships Act, 1841, including amendments from
subsequent acts.

This summary organizes the primary duty charges applicable to instruments under this law, specifying
which cases are exempted based on the type of instrument and its relation to the Government or
shipping acts.
_________________________________________________________________________________
Instruments Used in Single Transactions of Sale, Mortgage, or Settlement – SECTION 4
This section outlines the rules regarding multiple instruments used in a single transaction, specifically
in cases of sale, mortgage, or settlement. Here’s a breakdown:

Rules for Duty on Multiple Instruments in Single Transactions:

1. Charge on Principal Instrument:


o When several instruments are involved in a single sale, mortgage, or settlement
transaction, only the principal instrument is charged the full duty as specified in
Schedule I.
2. Duty on Additional Instruments:
o Each additional instrument, aside from the principal one, is charged a nominal duty of
one rupee, regardless of any duty specified in Schedule I for that instrument.
3. Determining the Principal Instrument:
o The involved parties have the right to decide which of the instruments should be
considered the principal instrument for the purposes of duty.
o Condition: The chosen principal instrument will carry the highest duty that would
apply to any of the instruments used in the transaction.

Examination and Impounding of Instruments – SECTION 33


This section explains the process for examining and impounding instruments that are not duly
stamped.

Key Provisions:

1. Authority to Impound:
o Any person authorized to receive evidence or in charge of a public office (except
police officers), who encounters an instrument they believe is chargeable with duty,
must impound it if it appears improperly stamped.
2. Examination Requirement:
o The responsible person must check if the instrument bears the correct stamp value
and description as per the law in force in India at the time of execution.
3. Exceptions:
o Magistrates or Judges in Criminal Courts are not obligated to examine or impound
instruments unless involved in proceedings under Chapters XII or XXXVI of the
Code of Criminal Procedure, 1898.
o High Court Judges may delegate this duty to a designated officer.
4. Doubtful Cases:
o The State Government can clarify which offices are public and designate persons in
charge of such offices.

______________________________________________________________________________
34. Special provision as to unstamped receipts. —Where any receipt chargeable 5[With a duty not
exceeding ten naye paise] is tendered to or produced before any officer unstamped in the course of the
audit of any public account, such officer may in his discretion, instead of impounding the instrument,
require a duly stamped receipt to be substituted therefore.
________________________________________________________________________________

Instruments Not Duly Stamped - Admissibility in Evidence-SECTION 35


This section outlines the rules regarding the admissibility of instruments that are not duly stamped.

Key Provisions:
1. General Rule:
o Instruments that are chargeable with duty cannot be admitted as evidence, acted upon,
registered, or authenticated by any authorized person unless duly stamped.
2. Exceptions:
o (a) An unstamped or insufficiently stamped instrument may be admitted upon
payment of the required duty plus a penalty (five rupees or up to ten times the
deficient duty, whichever is higher).
o (b) Unstamped receipts are admissible against the issuer with a penalty of one rupee.
o (c) If a contract or agreement is formed through correspondence with at least one
properly stamped letter, the entire agreement is deemed duly stamped.
o (d) Instruments are admissible in criminal court proceedings, except those under
Chapters XII and XXXVI of the Code of Criminal Procedure, 1898.
o (e) Instruments executed by or on behalf of the Government or certified by the
Collector are admissible.

Section 36: Admission of Instruments Not to Be Questioned


Once an instrument is admitted as evidence, its admissibility cannot be challenged later in the same
suit or proceeding on the grounds that it wasn't duly stamped, except as provided in Section 61.

Section 37: Admission of Improperly Stamped Instruments


The State Government can allow instruments with sufficient stamp value but of incorrect description
to be certified as duly stamped once the correct duty is paid, effective from the date of execution.

Section 38: Handling of Impounded Instruments


If an authorized person admits an unstamped instrument in evidence upon penalty payment (as per
Section 35) or duty payment (per Section 37), they must send a certified copy and penalty details to
the Collector.

In other cases, the original impounded instrument is sent directly to the Collector.

Section 39: Collector’s Power to Refund Penalties


The Collector can refund any excess penalty above five rupees if a copy of the instrument was sent
under Section 38(1).
Full penalty refund is possible if the instrument was impounded only due to writing errors per
Sections 13 or 14.

Section 40: Collector’s Power to Stamp Impounded Instruments


When the Collector receives an impounded instrument (except small-duty or promissory/bill notes):
If properly stamped, he endorses it as duly stamped.
If under-stamped, he may collect the necessary duty plus a five-rupee penalty, or up to ten times the
deficit, with the option to waive penalties if it violates Sections 13 or 14.

Section 41: Accidental Under-Stamping


If a person voluntarily presents an under-stamped instrument to the Collector within a year of
execution, acknowledging the lack of due stamp, and pays the proper duty, the Collector may waive
penalties if satisfied that the omission was accidental or necessary.

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