The idea of Government raising revenue by way of stamp duty from the transactions of its citizen said to be originated in Holland in the early sixteenth century. The British and other countries all over the world including Indian states followed it later on. The Indian Stamp Act, 1899 which extends to the whole of India except the state of Jammu & Kashmir is a fiscal enactment intended to secure revenue for the State. The stamp duties are fixed by Union Government on Bills of Exchange, Cheques, Promissory notes, bills of lading, letters of credit, insurance policies, transfer of shares, debentures, proxies and receipts which are listed in Entry 91 under the stamp act. The stamp duties on instruments other than those mentioned in Entry 91 of the Union List, falls under the State list which are levied as per Entry 63 of the Stamp Act 1899. Provisions other than those relating to rates of duty fall within the legislative power of both the Union and the States by virtue of Entry 44 appear in the Concurrent List. The entire revenue from stamp duties collected on all type of instrument goes only to the concerned State Government.
Kinds of stamps available in India
There are two kinds of stamps used for the payment of duty viz. Adhesive stamps (Postal and Non postal) and impressed stamps (Judicial/Non Judicial).
- Adhesive stamps (Fiscal Stamps/Labels): Adhesive stamps are of two categories viz. postal and non- postal. Postal stamps are used for postal transactions under Indian Post Office Act 1898. Non-Postal adhesive stamps are used for various types of legal transactions. Some of the large scale adhesive stamps in the usage are Revenue stamps (used for certain instruments/ documents and for receipts of above Rs.5000/-) [Go through the following link http://www.bankingschool.co.in/loans-and-advances/what-is-a-revenue-stamp/
- and obtain more information on usage of revenue stamp.], Court fee stamps (used for payment of processing charges for transactions with in government departments like Police/RTO etc.), notarial stamp (used by Notaries for authenticating the Notarized instruments/documents) and special adhesive stamps. These stamps are generally used in financial transactions such as Insurance stamp (used by insurance companies for the policies issued by them), Foreign Bill stamp (used for stamp duty paid in respect of import), Share transfer stamp (used by financial institutions for transactions of shares), brokers note stamp (Stamp Duty payment in respect of Transaction through Brokers) etc. The adhesive stamps affixed to any instrument chargeable with duty shall be cancelled by the executor in a manner that same cannot be reused. The best way of cancellation of adhesive stamp is writing executors name or name of his firm across the stamp with marking true date on it.
The Special adhesive stamps are prescribed under stamp acts of various states. When a power of attorney (POA) is executed outside India, such POA should be affixed with special adhesive stamps within 3 months from the date same is received in India and also an endorsement on it to be obtained from authorized officer for the stamp duty collected. The Registrar of assurance (Sub-Registrar Office), Superintendent of Stamps, office of the Collector, Financial Commissioner etc. are generally designated as authorized officer for the above purpose under the stamp rules of concerned state.
- Impressed stamps (Judicial/Non-Judicial):
a).Judicial Stamp Papers: The stamp papers used for payment of court fees are called judicial stamp papers. Judicial stamp papers (Court fee stamp papers) are attached to the end of the plaint with the details of Case No, Name of the parties, and signature of the advocates. Value of the judicial stamp papers attached to the plaints depending upon the amount of claim. The Judicial Stamp Papers are paid under Court fee act, 1870.
b).Non Judicial Stamp papers: Non judicial stamp papers are used for transfer of property, commercial agreements, loan agreements, guarantee agreements, power of attorney, indemnity bond etc. The Non-Judicial Stamp papers are paid under Indian Stamp Act, 1899. Under section 17 of Indian stamp act, all the documents chargeable with stamp duty shall be properly stamped before or at the time of execution of documents. The amount of stamp duty payable varies from state to state. The stamp papers used must be in accordance with the prevailing in the State where the document is first executed. Nowadays, e-stamping is replacing the engraved, embossed and franked stamp papers in the majority of states of India. (Go through the following link http://www.bankingschool.co.in/loans-and-advances/e-stamping-and-other-impressed-stamps-used-in-india/
and obtain more information on e-stamping and other kind of Non-judicial stamp papers).
Rate of Stamp duty in relation to type of transactions:
Every state in India follows a separate stamp duty structure under state stamps act. The stamp duty charges are also not uniform for all type of transactions. They vary depending upon the kind of documents used for the transactions.
- Stamp duty remains constant for any amount: For certain kind of documents viz. Power of Attorney, Indemnity Bonds, Affidavits etc. the stamp duty remains fixed irrespective of what value mentioned in the documents.
- Stamp duty changes according to value mentioned in the document: In the cases of mortgage deed, lease agreement, security bonds etc. the stamp duty is determined upon the value mentioned in the documents.
- Stamp duty changes according to value mentioned in the document or market value of the property whichever is higher: The third kind of stamp duty rates are that they were fixed based on either the value mentioned in the documents or the market value of the property whichever is higher. The sale deeds, agreement for sale, development agreement, conveyance of immovable properties, partition deeds etc. belongs to this category.
Adjudication of documents for stamp duty:
Whenever the parties involved in the transactions get the doubt about the correct amount of duty payable, such document may be presented to the stamp office for adjudication of stamp duty. The documents should be presented before the execution of document or within one from the date of execution. The stamp authority would certify whether the document is properly stamped or deficit of duty if any to be paid. The adjudication certificate issued by the stamp office is conclusive and final.
Impounding of documents:
The stamp authorities, sub-registrar of assurances and other Government officers in charge of public office (except Police officer) who have the authority to receive evidence, shall have the power to impound such document coming before them if it appears to them that such document/ instrument is not duly stamped when such instrument was executed or first executed.
Refund and validity of unused stamp papers:
Section 54 of Indian Stamp Act 1899 allows the refund of money to a bonafide purchaser in possession of a stamp which has not spoiled or rendered unfit useless for the purpose intended or for which he has no immediate use to return, provided it was purchased within the period of six months next preceding the date on which it was so surrendered. The Collector may if he thinks fit make the refund of money deducting 10 paise for every Rupee or portion of Rupee upon delivery of the stamp to be cancelled. For the licensed vendor of stamps full amount will be refunded on surrender of stamps.
It is a common perception that the stamp paper of more than six months old in possession of a person is unfit for usage in documentation. However, nowhere in the Indian stamp acts mention expiry date for usage of stamp papers. The stipulation of six months prescribed under Section 54 of the stamp act tells only on the subject of seeking refund of money on unused stamps and not for the use of stamp papers. In the case of Thiruvengada Pillai vs Navaneethammal and another (Supreme court 2008), the apex court dealt on the stamp papers used in the agreement of sale which were more than six months old and reached to the view that there is no impediment for a stamp paper purchased more than six months prior to the proposed date of execution being used for document. The above decision of the court is in view of that the Indian Stamp act has not barred usage of stamp papers which are more than six months old at the time of execution of document.