what is stamp duty and what is the penalty for it?

Question

who pays stamp duty and when? how is it calculated?

Answer 1

Stamp duty is a form of tax that is levied on documents. Typically, a physical stamp (A tax stamp) must be attached to or impressed upon the document to denote that stamp duty has been paid before the document becomes legally effective.
Contents

more on http://en.wikipedia.org/wiki/Stamp_duty

Answer 2

Stamp duty is a form of tax that is levied on documents. Typically, a physical stamp (A tax stamp) must be attached to or impressed upon the document to denote that stamp duty has been paid before the document becomes legally effective.

The scope of stamp duty has been reduced dramatically in recent years. Apart from transfers of shares and securities, the issue of bearer instruments and certain transactions involving partnerships, stamp duty was largely abolished in the UK from 1 December 2003. Stamp duty land tax (SDLT), a new transfer tax derived from stamp duty, was introduced for land transactions from 1 December 2003. Stamp duty reserve tax (SDRT) was introduced on agreements to transfer certain shares and other securities in 1986.

Answer 3

Stamp Duty is the duty payable to Government for assuring the legality of the matter printed on the stamp paper. In other words, it is the duty paid to the Government for rendering certain paid services to the public. Its covered under Indian Stamp Act, 1957. and Acts governing various States as well. Its calculated on the basis of face value of the document contents and some times on the basis of importance of the contents. Stamp Act does not compell stamp duty or even registration unless and otherwise one needs to be ensured that he/she is leagally safe. Example: Paying stamp duty for Land registration calculated on land value notified by local government from time to time and self assessment of the property, ensures the person who registers the said property in his name - its a public notice that he is the legal owner of the scheduled property for which he is paying due duty to the Government. The said Act is for safety of the general public and does not lead to any penalty unless the incumbent undervalues his property so that he can pay less duty to the Government.

Answer 4

Stamp duty - Wikipedia, the free encyclopedia
... that stamp duty has been paid before the document becomes legally effective. ... Stamp duty is a form of tax that is levied on documents.

Answer 5

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.

Penalty
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



it is calculated
Broadly under 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.)

who is liable to pay
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.
when is it paid?
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.

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Answer 6

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.
It differs from one state to other. Depending up on the state it can be varies.

The Constitutional Provisions Concerning Stamp Duties
I The Constitution of India has a number of other provisions relevant to stamp duties. Of these, Article 246 and the Seventh Schedule are relevant in regard to the legislative power to levy Stamp duties. Articles 265, 268 and 269 (e) are relevant mainly as regards the distribution of the revenues. The former is more important, for the purposes of a consideration of the Stamp Act. These Articles are reproduced as below;

246. Subject-matter of laws made by Parliament and by the Legislature of States.

(1) Notwithstanding anything in clauses (2) and (3), Parliament has exclusive power to make laws with respect to any of the matters enumerated in List I in the Seventh Schedule (in this Constitution referred to as the "Union List").

(2) Notwithstanding anything in clause (3), Parliament, and, subject to clause (1), the legislature of any State also, have power to make laws with respect to any of the matters enumerated in List III in the Seventh Schedule (in this Constitution referred to as the "Concurrent List").

(3) Subject to clauses (1) and (2), the Legislature of any State has exclusive power to make laws for such State or any part thereof with respect to any of the matters enumerated in List II in the Seventh Schedule (in this Constitution referred to as the "State List").

(4) Parliament has power to make laws with respect to any matter for any part of the territory of India not included (in a State) notwithstanding that such matter is a matter enumerated in the State List.

x x x x x x

265. Taxes not to be imposed save by authority of law. - No tax shall be levied or collected except by authority of law.

x x x x x x

268. Duties levied by the Union but collected and appropriated by the States.

(1) Such stamp duties and such duties of excise on medicinal and toilet preparations as are mentioned in the Union List shall be levied by the Government of India but shall be collected:-

(a) in the case where such duties are leviable within any Union Territory, by the Government of India, and

(b) in other cases, by the States within which such duties are respectively leviable.

(2) The proceeds in any financial year of any such duty leviable within any State shall not form part of the Consolidated Fund of India, but shall be assigned to that State.

269 Taxes levied and collected by the Union but assigned to the States- (1) The following duties and taxes shall be levied and collected by the Government of India but shall be assigned to the States in the manner provided in clause (2) namely;

a. Duties in respect of succession to property other than agricultural land;

b. Estate duty in respect of property other than agricultural land;

c. Terminal taxes on goods or passengers carried by railway, sea or air;

d. Taxes on railway fares and freights;

e. Taxes other than stamp duties on transactions in stock-exchanges and futures markets;

f. Taxes on the sale or purchase of newspapers and on advertisements published therein;

g. Taxes on the sale or purchase of goods other than newspapers, where such sale or purchase takes place in the course of inter-State trade or commerce;

h. Taxes on the consignment of goods (whether the consignment is to the person making it or to any other person), where such consignment takes place in the course of inter-state trade or commerce.

(2) The net proceeds in any financial year of any such duty or tax, except in so far as those proceeds represent proceeds attributable to Union territories, shall not form part of the Consolidated Fund of India, but shall be assigned to the States within which that duty or tax is leviable in that year and shall be distributed among those States in accordance with such principles of distribution as may be formulated by Parliament by law.

(3) Parliament may by law formulae principles for determining when a sale of purchase of, or consignment of, goods takes place in the course of inter-State trade or commerce.

II Briefly, the schedule provided for in the constitution is as follows

(a) Under Article 246, such Stamp duties as are mentioned in the Union List are levied by the Union, but, under Article 268, each State in which they are levied, collects and retains the proceeds (except in the case of Union Territories).

(b) Other Stamp duties are levied and collected by the States, by virtue of the legislative entry in the State List.

(c) And the Concurrent List contains the following entry

44. Stamp duties other than duties or fees collected by means of judicial stamps, but not including rates of Stamp duty."

This entry deals with the general subject of stamps. Provisions other than those relating to rates of duty are, thus within the legislative power both the Union and the States.

(d) Broadly speaking, therefore, except as regards Union territories, parliaments legislative power extends to-

(i) Rates of Stamp duty on the specified documents;

(ii) Machinery provisions, in respect of all documents.

III The position can be stated in the form of a Chart as follows

Union List Entry 91 State List Entry 63 Concurrent List Entry 44
Rates of Stamp duty in respect of bill of exchange, cheques, promissory notes, bills of lading, letters of credit, policies of insurance, transfer of shares, debentures, proxies and receipts. Rates of Stamp duty in respect of document other than those specified in the provisions of List-I with regard to rates of Stamp Duty Stamp duties other than duties or fees collected by means of judicial stamps but not including rates of Stamp duty.

IV Thus, the power of the Union extends to the whole field of Stamp duties, except that as regards rates of Stamp duty in the States, it is confined to the specified documents. It is plenary as regards machinery provisions.