LAW DECODED

Few Important points regarding stamp duty on share certificate: 1. Stamp duty is payable on issue price not on the value of the security. 2. In a case of a large number of shares, stamp duty can be payable in a lump sum and this fact should be mentioned on share certificate. 3.  STAMP DUTY ON SHARE IS STATE SUBJECT BUT STAMP DUTY ON DEBENTURE IS UNION SUBJECT . 4. The company should pay the stamp duty according to the state in which the registered office of the company is situated, not in the state where Board Meeting is held to consider an issue of shares. 5. One issue is whether the stamp duty is  payable on duplicate/split share certificate  or not. Section3 of the Indian Stamp Act states that every instrument mentioned in the schedule of the Indian stamp act which, not having been previously executed by any person is executed in India; shall be chargeable with stamp duty of the amount indicated in  schedule I . 6. Stamp duty is payable on a face value of shares

Stamp duty is a kind of tax which is levied when the shares are transferred from one person to another. Stamp duty on transfer of shares is @ the rate of 0.25% of the consideration i.e. amount to be paid Rs. 25 paise for a share transfer of Rs 100.( as per 62 of Schedule I ). Stamp duty can be paid through adhesive stamp.  Under 8A of the Indian Stamp Act, securities issued in electronic form need not be stamped provided the issuer pays stamp duty on the total amount of securities issued. Also, the transfer of registered ownership of share from a person to a depository or from a depository to a beneficial owner shall not be liable to any stamp duty.

Most of time a question is asked what is expiry of an stamp paper. Is it six month or less? But, there is no such expiry prescribed in Indian Stamp Act which is discussed in following case also. SOURCE OF CONFUSION: The Trial Court and the High Court have doubted the genuineness of the agreement dated 5.1.1980 because it was written on two stamp papers purchased on 25.8.1973 and 7.8.1978. The learned counsel for the first respondent submitted that apart from raising a doubt about the authenticity of the document, the use of such old stamp papers invalidated the agreement, as the stamp papers used in the agreement of sale were more than six months old, they were not valid stamp papers and consequently, the agreement prepared on such 'expired' papers was also not valid. WHAT COURT DECIDED Apex Court held that that the Indian Stamp Act, 1899 nowhere prescribes any expiry date for use of a stamp paper. Section 54 merely provide that a person possessing a stamp paper f