Stamp duty is a type of tax, which is payable when
instrument is executed on state either:
- On or before execution of documents/instruments or
- On the date of execution of documents/instruments or
- On the next working day of executing such instrument/documents.
The stamp duty has to be paid at any time as per the
three alternatives given above. It is advisable to pay the stamp duty before
the execution of document.
For belated payment of stamp duty the penalties are
prescribed on deficit portion of stamp duty U/s. 34 of the act at 2% per month
or part of the month.
The execution of the document or instrument means
putting a signature on the instrument by the person executing the instrument. In
other words, the execution is the signing of documents by the parties to such
documents which brings contents of documents in force.
Who is liable for payment of stamp duty?
Section 30 of the Bombay Stamp Act, 1958 indicates
that:
- In absence of an agreement to the contrary barring certain documents generally the stamp shall be borne by the purchaser/buyer/transferee/assignees. However, there are some exceptions to the above.
- The liability of payment of stamp duty is to be met by the conveyance or lease in respect of lease or agreement to lease.
- In respect of instrument of exchange the stamp duty is to be paid in equal proportions by both the parties. In partition, duty is to be shared by the party in proportion to their shares.
- In respect of mortgage release, bonds and settlement stamp duty is paid by person making or drawing the instrument.
What are the different methods of payment of stamp
duty?
Stamp duty can be paid by various alternative ways
such as:
- By using stamp papers, which are purchased from stamp vendors or banks. Here, in such cases bills or receipts of stamp vendors or banks are asked by the Registrar. It is better to obtain and preserv such stamp vendors bills/receipts/bank slips issued by them
- Through franking machine by which stamp is franked on documents by the government authorized agent or center or now even by some specified authorized banks. Here too the franking receipt is to be obtained as the same is asked for by registrar.
- In some cases, stamp duty authority issues a challan by which stamp duty is to be paid to RBI or authorized banks like State Bank of India, etc. and more particular as per the arrangement made by the state government from time to time for that jurisdiction. There are different methods in different areas for payment of stamp duty for which one has to pre-inquire.
- Now stamp duty through e-payment is more popular mode of stamp duty payments.
- Some branches of some banks are authorized to receive stamp duty. Such banks also accept stamp duty by pay slip and also by cash to certain limit.
On whose name is the stamp paper to be purchased?
- With effect from 01.05.1994. the stamp paper has to be purchased in the name of any one of the parties to the document. Stamp paper should be in the name of either party to such instrument.
- Prior to 01.05.1994. the stamp paper in the name of legal representative such as solicitor, agent, and advocate etc. was allowed. But on or after 1.5.1994. the stamp paper, which is purchased in the name of a person other than the party to such an agreement, is considered and treated as invalid in the court law and all consequences for use of un-stamped document will follow, instrument is liable to be impounded and recovery actions will follow. Even stamp papers purchased in name of power of attorney holder may not be valid as power of attorney though executant is not party to agreement.
- The stamp paper purchased/franked/e-paid is valid for six months from the date of its purchase or franking thereon. The franking of document at General Stamp Office, Mumbai started with effect from 19.05.1995.
