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.
Q. Is stamp duty payable on the document or transaction?
A. It is payable on document and not on transaction. Stamp duty is charged on the basis of the contents of the document only. If any information essential for working out stamp duty is missing in the document, valuation officer can all for the same. Information such as the Carpet or Built-up area of the flat, number of floors in the building, year of construction, name of Division/Village and C.S./C.T.S. number or plot of land on which property is situated must be mentioned in the agreement.
Q. Is stamp duty payable on all documents relating to transfer of immovable property?
A. Except transfer by will (or by Original nomination in a co-operative housing society) all transfer documents including agreements to sell, conveyance deed , gift deed, mortgage deed, exchange deed, deed of partition, power of attomeys, leave and license agreement, agreement to tenancy, lease deeds, power of attomeys to sell for consideration etc have to be property stamped before registration.
In our opinion when a nominee transfers the flat subsequently in the name of legal heirs, that transfer document is to be stamped as a Transfer as per Article 59 of Schedules - I of The Bombay Stamp Act, 1958,(i.e. Rs. 100, at present), as the nominee is a deemed trustee and the legal heirs are beneficiaries.
Q. In whose name the stamp paper required is to be purchased?
A. From 01/05/1994 stamp paper is to be purchased in the name of one of the parties to the documents. if the stamp paper is not in the name of one of the parties and if it is used for preparing the agreement then such agreement will be treated as if no stamp paper was used. However, it will not make the agreement invalid and can be enforced in law if proper stamp duty is paid subsequently. Prior to 01/05/1994 stamp paper could be purchased in any name.
Q. What is the validity period of a stamp paper?
A. Stamp paper purchased up to 30/11/1989 was valid for any period of time. However from 01/12/1989 all stamp paper (whether purchased before, on or after 01/12/1989) is valid for a period of six months from the date of purchase and after that it is treated as ordinary paper as if it has no stamp.
However Court fee stamps and Court fee paper is valid for any period of time as there is no time specified in the Bombay Court fees Act, 1959, for its use.
Q. What if after adjudication one does not pay stamp duty?
A. If the agreement is signed before adjudication, on the basis of the stamp duty with interest and penalty as application. However, in the case of an unsigned agreement, one may ignore the adjudication order and close the matter if so desired.
Q. Where can a person pay stamp duty?
A. Stamp Duty could be paid legally without adjudication, on the basis of the Stamp Duty Ready Reckoner, at various Stamp Duty payment centers. (See Table of Stamp Duty Payment Centres.)
Apart from above centers there are many authorised stamp vendors from whom stamp paper of the required amount can be purchased and agreement made on them, which is another way of paying stamp duty. Stamp vendors sell stamp papers of face value up to Rs.10,000. A list of Licensed Stamp Venders in Mumbai is displayed at General Stamp office.
Stamp Duty Ready Reckoner is a public document and is available in any law book shop.
To book an appointment online at ozgcenter.com/appointment
Ozg Cooperative Society Lawyer