Everything you wanted to know about Stamp Duty

Q. 1. What is the bombay stamp Act,1958?

The Bombay Stamp Act, 1958 comes into force on 16th February, 1959 and is applicable in the
State of Maharashtra. This Act is intended to levy Stamp duty on certain types of documents
executed in the State or brought from outside for acting upon the same in the State. The various
instruments/documents are broadly covered under different 62 articles listed in Schedule-I
appended to the Act. The rates at which stamp duty is levied on these documents are mentioned
in Schedule –I. The Bombay Stamp Act, levies Stamp duty on documents/instruments by which
any right or liability is, or purports to be, created, transferred, limited, extended, extinguished or
recorded. The stamp duty is payable on instrument and not on the transactions.

Q. 2. What is Stamp Duty ?

It is a type of tax which is paid for the transaction performed by way of document or instrument
under the provisions of Bombay Stamp Act, 1958 and Indian Stamp Act, 1899.

Q. 3. Whether Stamp duty is payable on transactions or on instruments?

It is payable on instruments and not on transactions. The definition of the term instrument is very
wide.

Q. 4. What is instrument ?
Instrument means any document by which any right or liability is, or purports to be, created,
transferred, limited, extended, extinguished or recorded.

Q. 5. What is document ?
As defined in Evidence Act, document means only matter expressed or described upon substance
by means of letters, figures or marks or by more than any of those means intended to be used or
which may used for the purpose of recording that matter.

Q. 6. Why Stamp Duty has to paid on document/instrument ?

The payment of proper Stamp duty on instruments bestows legality on them. Such instruments
get evidentiary value and are admitted in evidence in Court of law. The instruments which are
not properly stamped are not admitted in evidence .

Q. 7. Which provisions/ Articles of Indian Stamp Act, 1899 attracts Stamp duty in the state
ofMaharashtra ?
The following Articles of The Indian Stamp Act, 1899 attract Stamp duty in the state
of Maharashtra

Article No. Description of instrument.

13 Bill of Exchange
14 Bill of Lading-
27 Debenture
37 Letter of Credit
47 Policy of Insurance
49 Promissory Note
52 Proxy
53 Receipt
62 Transfer

Q. 8. What is meant by execution of instruments?

Execution means putting signatures on the instruments by the person/persons executing the
instruments.

Q. 9. How Stamp Duty is calculated.?

Broadly the 62 articles of Schedule I are grouped in three categories.
Category i) Articles whose amount of Stamp duty is fixed irrespective of the value mentioned in
the document / instrument. ( Viz. Administration Bond, Adoption deed, Affidavit, Divorce,
Appointment in execution of power , Apprenticeship deed, Article of clerkship, Award,
Cancellation deed, Charter party, Duplicate, Copy of Extracts, Entry of Memorandum of
Marriage, Indemnity Bond, Letter of license, Memorandum of Association of a company,
Notarial Act, Power of attorney, etc.)

Category ii) Articles where depending upon the value mentioned in the document, the amount of
stamp duty is varied. (Viz. Agreement relating to deposit of title deeds, pawn, pledge or
hypothecation, Clearance List, Lease , Article of association, Mortgage deed, Security Bond,
etc.)

Category iii) Articles which attracts Stamp duty on the consideration mentioned in the document
or True Market Value, whichever is higher. ( Viz. Conveyance, Agreement for sale, Gift,
Exchange,Partnership Deed,Partition, Development Agreement, Transfer, Trust, etc.)

For category I and II types of instruments the Stamp duty payable can be ascertained by referring
to the Schedule I; but to ascertain the Stamp duty on the instruments mentioned in Category III,
the expertise in valuation is required. The True Market Value is determined as per the provision
of the Bombay Stamp ( Determination of True market value of the property ) Rules, 1995.

Q. 10. What point of time of Stamp Duty payable. ?

The Section 17 & 18 of the Act states the time of payment stamp duty. Generally all the
instruments executed in the state shall be stamped before or at the time of execution or
immediately thereafter or on the next working day following the day of execution. Similarly, the
instruments which is executed out of the state and within three months from its receipt in the
state, shall be stamped.

Q. 11. How is Stamp Duty payable?

Stamp Duty can be paid by
1. Using Stamp paper
2. Using adhesive stamps
3. Franking
Q. 12. Who is liable to pay Stamp Duty ?
As per the provisions of Section 30 the onus of payment of Stamp duty in the absence of an
agreement to the contrary, shall be borne by the executing in the manner provided their with
respect of certain kinds of documents viz. Mortgage deed, release, security bond, settlement,
bond etc. in the case of conveyance, the grantee and lease the lessee shall pay the stamp duty in
the case of exchange of property, both the parties in equal share shall pay stamp duty. In case of
partition, the parties thereto in proportion to their respective shares should pay stamp duty.

Q. 13. What is meant by adjudication of instruments? Which authority is to be approached

for adjudication of instruments ? What is the amount of fees required to be paid for
adjudication? What documents are to be enclosed while submitting application for
adjudication ?
Section 31, of Bombay Stamp Act, 1958 deals with the adjudication of the instruments.
Adjudication means determining the chargeability of stamps duty on instruments. The authority
to be approached is the Collector of Stamps appointed in each District. Application for
adjudication should be accompanied by ¸ true copy or an abstract of the instrument and also with
such affidavit or other evidence as may be necessary to prove that all facts affecting the
chargeability of the instrument have been truly setforth in the instrument along with the proof of
payment of Rs. 50/- as adjudication fee. Adjudication can be done both for signed as well as
unsigned documents.

Q. 14. How to pay Stamp Duty ?

The Document which is chargeable with Stamp duty can be prepared on the non-judicial Stamp
paper of appropriate value. Unexecuted document can be got franked with special adhesive
Stamps by Franking Machine intended for stamping such documents, by tendering required
amount in the office of collector of Stamps whereever this facility is available. When documents
is lodged for adjudication, on receiving intimation as to the amount of Stamp duty payable by
tendering appropriate amount equal to the amount of Stamp duty and penalty if any, the
Collector of Stamp shall certify the document as to the payment of proper duty.

Q. 15. What is the validity of Stamps ?

As per the provisions of Section 52-B, the stamps which are purchased and not used within six
months shall be rendered invalid thereafter. The stamps purchased and not used for intended
purpose are entitled for refund after deduction of certain charges, if lodged for refund within six
months from the date of purchase and on fulfilling the conditions stipulated in Chapter V of the
Bombay Stamp Act, 1958.

Q. 16. What are the consequences of not paying Stamp duty?

The documents if not duly stamped, shall not be admissible in evidence in the court of law. As
per the provision of Section 59, any person who, with the intention to evade the Stamp duty,
executes or signs any instruments chargeable with stamp duty, without the same being duly
stamped, shall on conviction, be punished with rigorous imprisonment for ¸ term which shall not
be less than one month but which may be extended upto six months and fine upto Rs. Five
Thousand. The Section 67 and 68 empowers the authorities to enter upon any premises and to
inspect and impound/seize the documents which are not duly stamped and burden is casted upon
every public officer to assist the authorities in detection of evasion. The documents impounded
for want of proper duty, attracts penalty @ 2 % per month from the date of execution of such
document.Miscellaneous

Q. 17. In whose name the stamps are required to be purchased ?

The stamps are required to be purchased in the name of one of executors to the instrument.

Q. 18. What happens if the instrument is executed on stamps which does not bear the name
of one of the executors.?
Such instruments are not admitted in evidence, for any purpose. These instruments are also
treated as not properly stamped. These instruments are liable to be impounded and sent to the
Collector of Stamps for recovery of proper stamp duty.

Q. 19. What are the rates of Stamp duty on instruments relating to transfer of immovable
property.
The rates of stamp duty on instruments relating to transfer of immovable property vary from
place to place. The rates are specified in Article 25 of Schedule 1 appended to the Bombay
Stamp Act, 1958. However, Article 25(d) which deals with the instruments of transfer of
residential premises in ¸ Co-operative Housing Society or where the provisions of Maharashtra
Ownership Flats Act 1963 and the Maharashtra Apartment Ownership Act, 1970 apply, provides
for levy of concessional rates of Stamp duty. In areas, where the provisions of the aforesaid Acts
apply, residential premises upto ¸ market value of Rs. 1,00,000/- attract such concessional rates.
Instruments relating to the transfer of residential premises of market value of more than Rs.
1,00,000/- attract normal rates of stamp duty for values over and above Rs. 1,00,000/- as
applicable in that area. Such normal rates are 8 %, 6%, 3 %, 5 %. Etc. depending on where the
property is situated.

Q. 20. Whether any penalty is levied in cases referred to the Collector by the Sub-Registrar
for determination of true market value of the property where the Collector comes to the
conclusion that the true market value of the property was not stated in the instrument ?
In addition to recovery of deficit Stamp duty in such cases, the concerned party is required to pay
penalty of Rs. 250/- plus 15 % interest for each year or part of the year on the deficit amount
from the date of presentation of instrument before the Sub-Registrar.

Q. 21. What remedy is available to the parties, in case they do not agree with the true
market value of the property as determined by Collector of the District ?
The parties can go in appeal to the Chief Controlling Revenue Authority, Maharashtra State,
Pune. under section 32 B of Bombay Stamp Act, 1958.

Q. 22. Is the chargeability of stamp duty determined by the Collector of stamps in

adjudication final ? Can ¸ person go in an appeal against the order passed by the Collector
of Stamps ? Is there any time limit for filing the appeal ?
The chargeability of stamp duty on the instrument as determined by the Collector of Stamps is
not final. The person affected by the order of the Collector of Stamps can go in appeal to the
Chief Controlling Revenue Authority, Maharashtra State, Pune as provided in section 53 of the
Bombay Stamp Act, 1958, limit prescribed for the filing of an appeal is within 60 days.
Q. 23. Why do the authorities insist on disclosure of relevant facts and circumstances to be
fully and truly set forth in the instrument ?
Section 28 of the Bombay Stamp Act, 1958 casts the duty on the executants to disclose and truly
set forth relevant facts and circumstances in the instruments. This helps in finding out the types
of transactions involved in the instruments which in turn helps in the determination of proper
stamp duty payable on such instruments. Duty is not payable on the title or the heading given on
the top of the instrument but on the recitals as stated in the instruments.

Q. 24. Can there be refund of Stamp duty in case if the Stamp paper is unused or
multiliated?
Yes, Refund can be claimed v/s 47 of The Bombay Stamp Act 1958. However such claim can be
made to the collector of Stampswithin a period of 6 months from the date of purchase of Stamps

Q. 25. What is meant by impounding of instruments ?

Every person having by law or consent of parties authority to receive evidence and every person
in charge of ¸ public office before whom any instrument chargeable with stamp duty is produced
or comes in the performance of his functions. Shall if it appears to him that instrument is not
duly stamped, impound the same, irrespective whether the instrument is not valid in law. Such
impounded document is required to be forwarded to the Collector of Stamps for recovery of
deficit stamp duty in addition to penalty at the rate of 2 % per month .

Q. 26. As the cost of flat is required to be paid in installment as per agreement whether the
stamp duty can be recovered in part at the time of payment of such installments instead of
making full payment at the time of entering into the agreement ?
No. Stamp duty cannot be paid in settlements, Various chambers Associations have made
suggestions and representations to the stamp authorities in this regard. However till date no effort
is made by the Stamp authorities towards implementation of the same.

Q. 27. In case where the builder sells ¸ flat to an individual in ¸ building where the society is
not formed and the document is not stamped and the individual resells the flat to another
persons who pays the stamp duty. The builder confirms the said agreement and thereafter
the society is formed. The purchaser becomes ¸ member of ¸ society. Whether the original
purchaser in future will be liable to pay stamp duty and whether stamp duty can be
charged on the flat and whether the first purchaser can be forced to pay the stamp duty by
the Government or it will be have to be borne by the second purchaser again who is the
present owner of the flat. ?
The original purchaser will be liable to pay stamp duty on the fair market value prevalent at the
date of the document as determined by the Stamp authorities as stamp duty is paid on each
transaction. However, the reply is subject to the confirmation of the Hon’ble Supreme court of
India. In the question under consideration in my opinion person is responsible to pay stamp duty
on only his own purchase transaction and hence the second purchase in my opinion will not be
liable to pay the unpaid stamp duty of the first purchaser.

Q. 28. On what basis ( Carpet, Built-up or Super built-up ) are the rates fixed by the stamp
authorities ?
For the purpose of determination of True Market Value, the Built-up area is taken into account.
Q. 29. Will stamp duty have to be paid if there is a ¸deed of family settlement and a flat is
transferred amongst family members ?
Yes. As per the provisions of Bombay Stamp Act, Stamp duty will have to be paid on a deed of
family settlement.

Q. 30. Will stamp duty have to be paid if the flat is gifted by a donor ?
Yes. Stamp duty will have to be paid if the flat is gifted by the donor.

Q. 31. Is the decree of final order of a civil court by which immovable property is
transferred be liable to be stamped as a conveyance ?
Yes, After the amendment of Article 25 of the Bombay Stamp Act. The definition of conveyance
has been widened, in view of the amendment decree or final order of the court by which
immovable property is transferred is liable to be stamped as a conveyance.

Q. 32. In case of resale of the flat who has to pay the Stamp duty, the purchaser or the
seller ?
The parties can themselves decide who shall pay the stamp duty. If nothing is mentioned in the
agreement then as per section 30 of the Bombay Stamp Act, 1958 if the transaction relates to
resale of flats then the stamp duty will have to be paid by the purchase.

Q. 33. Are orders made by the High court under section 394 of the Companies Act, 1956 in
respect of amalgamation of companies be liable for payment of stamp duty as on a
Conveyance ?
Yes, after the amendment made in 1993, the preview of Article 25(d) has been widened so as to
bring orders made by the High Court under section 394 of the Companies Act, 1956. In respect
of amalgamation of companies. Therefore stamp duty as on a Conveyance will have to be paid
on such orders.

Q. 34. In whose name should the stamp paper be purchased. ? Can the client execute the
document on ¸ stamp paper purchased by an Advocate ?
As per section 34 of the Bombay Stamp Act, 1958 the stamp papers should be in the name of one
of the parties who has signed the documents. Therefore the stamp paper should be purchased in
the name of one of the parties who would be signing the instruments. If the stamp paper has been
purchased in the name of an Advocate, C.A., etc than such instrument shall be treated as an
instrument not duly stamped and shall be inadmissible in evidence.

Q. 35. What are the different types of documents?

As of today there are 62 kinds of documents each one signifying a separate kind of deed. These
are as follows: (numbers in italics indicate the serial no. of support documents required from the
support document list furnished below; absence of number indicates that no support documents
are required).

1. Acknowledgement
2. Administration Bond
3. Adoption Deed
4. Affidavit
5. Memorandum of an Agreement.
6. Agreement relating to deposit of Title deeds, pawn, pledge or hypothecation
7. Appointment in execution of power
8. Appriasal or Valuation
9. Apprenticeship Deed
10. Articles of Association of a company
11. Articles of clerkship
12. Award
13. Bond
14. Bottomory Bond
15. Cancellation
16. Certificate of sale
17. Certificate or other document
18. Charter Party
19. Clearance List (purchase or sale of Government Securities)
20. Clearance List (purchase or sale of cotton)
21. Clearance List (purchase or sale of bullion)
22. Clearance List (purchase or sale of oil seeds)
23. Clearance List (purchase or sale of yarn)
24. Composition Deed
25. Conveyance ( 1,2,3,4,5,6)
26. Copy or Extract
27. Counterpart or Duplicate
28. Customs Bond or Excise Bond.
29. Delivery Order
30. Divorce
31. Entry or memorandum of marriage.
32. Exchange of property (1,2,3,4,5,6)
33. Further charge
34. Gift (1,2,3,4,5,6)
35. Indemnity Bond
36. Lease (1,2,3,4,5,6)
37. Letter of allotment of shares
38. Letter of license
39. Memorandum of association of a company
40. Mortgage Deed (1,2,3,5,6)
41. Mortgage of crop
42. Notarial Act
43. Note or Memorandum
44. Note of protest by master of ship
45. Order for the payment of money
46. Partition (4,5,6)
47. Partnership
48. Power of Attorney
49. Protest of Bill or Note
50. Protest of the master of ship
51. Reconveyance of mortgaged property
52. Release (1,2,3,4,5,6)
53. Respondentia Bond
54. Security Bond or Mortgage Deed (1,2,3,5,6)
55. Settlement (1,2,3,4,5,6)
56. Share Warrants
57. Shipping Order
58. Surrender of Lease (1,2,3,4,5,6)
59. Transfer (1,2,3,4,5,6)
60. Transfer of Lease (1,2,3,4,5,6)
61. Trust (1,2,3,4,5,6)
62. Warrant of goods.
Documents can also be classified as Testamentary and Non Testamentary depending upon the
time when they come into force. E.g. Will is of testamentary type because it doesn’t come into
force immediately whereas a sale deed is a non-testamentary document since it has immediate
effect.On the same lines, some documents have to be compulsorily registered e.g. a sale or lease
deed while registration for some is optional e.g. affidavit.

Q. 36. What are the different support documents generally required to be submitted for
registration?
For registration purpose, some of the above documents should be accompanied by one or more
support documents. The list of support documents is as follows:
1. Income Tax clearance certificate under 230 A-1 (ITC) Act 1961.
2. Income Tax certificate 269 UL (37I) Act 1961.
3. Permission under Urban Land Ceiling Act 1976 , section 26.
4. Bombay Stamp Act 1958, section 32 A.
5. Bombay Stamp Act 1958, section 33.
6. Registration Act 1908 sections 25 and 34.