Not the CA's work, but the institution acting on the file
Getting the stamping wrong rarely stops the CA's work. More often it stops the institution acting on the file, because the document looks complete and then fails at the moment it is needed.
Net Worth & Solvency Glossary · Documents
Stamp Duty on Certificate-Adjacent Documents in India
noun · a tax on the paper that records a deal, not on the deal itself
Definition
Stamp duty is a tax on documents (instruments), not on transactions. In India it is charged on instruments such as conveyances, mortgages, leases, gift deeds, powers of attorney, affidavits and indemnity bonds, under the Indian Stamp Act as applied by each state, or under a state's own stamp law.
Rates and the list of chargeable documents vary from state to state.
The duty in one glance
- 1The deala sale, a loan, a promise to indemnify
- 2The document that records itthe instrument
- 3Stamp dutycharged on the instrument, not on the deal
- Set by
- Each stateUnder the Indian Stamp Act as applied by the state, or the state's own stamp act
- Paid by
- E-stamp certificateStamp paper is still used for small amounts in some states
- The rate
- Fixed or a percentageA small fixed amount on some documents, a percentage of value on others; set by state law and not given here
- Not
- Registration fee, property tax or notarisationThree charges often confused with it
Meaning
01What stamp duty attaches to under Indian stamp law
The duty attaches to the document that records a transaction, not to the transaction itself. The same deal can attract duty, or not, depending on whether it was put in writing and in what form.
The deal
Not taxed as such
A sale, a loan, a promise to indemnify: on its own, the transaction is not what stamp law charges.
The instrument
Where the duty attaches
Once the deal is put in writing, the document that records it is the chargeable instrument, and its form decides the duty.
Why it is called stamp duty. It was traditionally paid by using stamped paper or by fixing stamps to the document, which marked that the duty had been paid.
Set by each state, so the rate takes two shapes
Rates not given here- A small fixed amounton some documents
- A percentage of valueon others
Because stamp law is largely a state subject, both the list of chargeable instruments and the rates differ by state. This entry does not give rates, because they are set by state law and change.
Where it bites. An under-stamped or unstamped document can run into trouble when it has to be relied on as evidence, so getting the duty right at execution matters.
In a certification file
02Which papers in a certification file need stamping: affidavits, undertakings, indemnities
In a certification file, the papers that need stamping are usually the supporting ones, not the CA's certificate itself.
- AffidavitsSworn by the client.For example for a court or a visa file.
- Undertakings and indemnity bondsGiven to a bank or company.For example before an inherited asset is released.
- Powers of attorneyAuthorising someone to act for the client.
- The underlying deedsThe deeds the certificate relies on, such as a sale deed, mortgage or partnership deed.These should already have been stamped when they were made.
Signed in one state, used in another
Where a document is signed in one state and used in another, the stamp law of each may matter, so the state is checked before the paper is bought.
Paying it
03State stamp acts, e-stamping through SHCIL and penalties for under-stamping
Payment has largely moved to e-stamping.
- 1In many states
An e-stamp certificate
Issued through Stock Holding Corporation of India Ltd (SHCIL) as the central record-keeping agency and its authorised collection centres.
- 2Still used
Physical stamp paper
For small amounts in some states.
- 3The check
A unique number, verified online
An e-stamp certificate carries a unique number that can be checked online, which has made forged stamp paper much harder to pass.
Short-stamping is not a rounding error. Under-stamping can cost more than the duty that was short, so guessing the amount is risky.
In one stateCorrectly stamped
In anotherShort
The rate and the classification of an instrument remain state matters, so the same undertaking can be correctly stamped in one state and short in another.
Written by Subham Jhunjhunwala · Reviewed by CA Sundram Gupta
Basis: the Indian Stamp Act as applied by each state, and the states' own stamp acts, as named in the definition. This entry describes Indian practice in general terms. The stamp law of the state concerned governs each document.