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INDIAN STAMP ACT, 1899

INDIAN STAMP ACT, 1899

2 of 1899

An Act to consolidate and amend the law relating to Stamps. Whereas it is expedient to consolidate and amend the law relating to Stamps; It is hereby enacted as follows:-

SECTION 01: SHORT TITLE, EXTENT AND COMMENCEMENT

(1) This Act may be called the Indian Stamp Act, 1899.

(2) It extends to the whole of India except the State of Jammu and Kashmir: Provided that it shall not apply to the territories which, immediately before the 1st November, 1956, were comprised in Part B States (excluding the State of Jammu and Kashmir) except to the extent to which the provisions of this Act relate to rates of stamp-duty in respect of the documents specified in entry 91 of List 1 in the Seventh Schedule to the Constitution.

(3) It shall come into force on the first day of July, 1899.

SECTION 02: DEFINITIONS

In this Act, unless there is something repugnant in the subject or context,- Banker.

(1) "Banker" includes a bank and any person acting as a banker; Bill of exchange.

(2) "Bill of exchange" means a bill of exchange as defined by the Negotiable Instruments Act, 1881 (26 of 1881), and includes also a hundi, and any other document entitling or purporting to entitle any person, whether named therein or not, to payment by any other person of, or to draw upon any other person for, any sum of money; Bill of exchange payable on demand.

(3) "Bill of exchange payable on demand" includes-

(a) an order for the payment of any sum of money by a bill of exchange or promissory note, or for the delivery of any bill of exchange or promissory note in satisfaction of any sum of money, or for the payment of any sum of money out of any particular fund which may or may not be available, or upon any condition or contingency which may or may not be performed or happen;

(b) an order for the payment of any sum of money weekly, monthly or at any other stated period ; and

(c) a letter of credit, that is to say, any instrument by which one person authorizes another to give credit to the person in whose favour it is drawn; Bill of lading.

(4) "Bill of lading" includes a "through bill lading" but does not include a mate's receipt;

Bond.

(5) "Bond" includes-

(a) any instrument whereby a person obliges himself to pay money to another, on condition that the obligation shall be void if a specified act is performed, or is not performed, as the case may be :

(b) any instrument attested by a witness and not payable to order or bearer, whereby a person obliges himself to pay money to another; and

(c) any instrument so attested, whereby a person obliges himself to deliver grain or other agricultural produce to another ; Chargeable.

(6) "Chargeable" means as applied to an instrument executed or first executed after the commencement of this Act, chargeable under this Act and, as applied to any other instrument chargeable under the law in force in India when such instrument was executed or, where several persons executed the instrument at different times, first executed ;

Cheque.

(7) "Cheque" means a bill of exchange, drawn on a specified banker and not expressed to be payable otherwise than on demand;

(8) ** ** . **

(9) "Collector"-

(a) means, within the limits of the towns of Calcutta, Madras and Bombay, the Collector of Calcutta, Madras and Bombay, respectively and, without those limits, the Collector of a district, and

(b) includes a Deputy Commissioner and any officer whom the State Government may, by notification in the Official Gazette, appoint in this behalf; Conveyance

(10) "Conveyance" includes a conveyance on sale and every instrument by which property, whether movable or immovable, is transferred inter vivos and which is not otherwise specifically provided for by Schedule I: Duly stamped.

(11) "Duly stamped" as applied to an instrument, means that the instrument bears an adhesive or impressed stamp of not less than the proper amount, and that such stamp has been affixed or used in accordance with law for time being in force in India ;

Executed and execution

(12) "Executed" and "execution", used with reference to instruments, mean "signed" and "signature"; Impressed stamp.

(13) "Impressed stamp" includes-

(a) labels affixed and impressed by the proper officer, and

(b) stamps embossed or engraved on stamped paper; India

(13A)"lndia" means the territory of India excluding the State of Jammu and Kashmir;

Instrument

(14) "Instrument" includes every document by which any right or liability, is, or purports to be, created, transferred, limited, extended, extinguished or recorded;

Instrument of partition

(15) "Instrument of partition" means any instrument whereby co-owners of any property divide or agree to divide such property in severally, and includes also a final order for effecting a partition passed by any revenue- authority or any Civil Court and an award by an arbitrator directing a partition; Lease.

(16) "Lease" means a lease of immovable property, and includes also-

(a) a patta;

(b) a kabuliyat or other undertaking in writing, not being a counterpart of a lease, to cultivate, occupy, or pay or deliver rent for, immovable property;

(d) any writing on an application for a lease intended to signify that the application is granted; Marketable security

(16A)"Marketable security" means a security of such a description as to be capable of being sold in any stock market in India or in the United Kingdom: Mortgage-deed.

(17) " Mortgage-deed" includes every instrument whereby, for the purpose of securing money advanced, or to be advanced, by way of loan, or an existing or future debt, or the performance of an engagement, one person transfer, or creates, to, or in favour of, another, a right over or in respect of specified property; Paper

(18) "Paper" includes vellum parchment or any other material on which an instrument may be written; Policy of insurance

(19) "Policy of insurance" includes-

(a) any instrument by which one person, in consideration of a premium, engages to indemnify another against loss, damage or liability arising from an unknown or contingent event;

(b) a life -policy, and any policy insuring any person against accident or sickness, and any other personal insurance ; Policy of group insurance

(19A) "Policy of group insurance" means any instrument covering not less than fifty or such smaller number as the Central Government may approve, either generally or with reference to any particular case, by which an insurer, in consideration of a premium paid by an employer or by an employer and his employees jointly, engages to cover, with or without medical examination and for the sole benefit of persons other than the employer, the lives of all the employees, or of any class of them, deter- mined by conditions pertaining to the employment, for amounts of insurance based upon a plan which precludes individual selection; Policy of sea-insurance or sea-policy

(20) "Policy of sea-insurance" or "sea-policy"-

(a) means any insurance made upon any ship or vessel (whether for marine or inland navigation), or upon the machinery, tackle or furniture of any ship or vessel, or upon any goods, merchandise or property of any description whatever on board of any ship or vessel, or upon the freight of, or any other interest which may be lawfully insured in, or relating to, any ship or vessel, and

(b) includes any insurance of goods, merchandise or property for any transit which includes, not only a sea risk within the meaning of clause (a), but also any other risk incidental to the transit insured from the commencement of the transit to the ultimate destination covered by the insurance. Where any person, in consideration of any sum of money paid or to be paid for additional freight or otherwise, agrees to take upon himself any risk attending goods, merchandise or property of any description whatever while on board of any ship or vessel, or engages to indemnify the owner of any such goods, merchandise or property from any risk, loss or damage, such agreement or engagement shall be deemed to be a contract for sea-insurance;

(21) "Power of attorney" includes any instrument (not chargeable with a fee under the law relating to court-fees for the time being in force) empowering a specified person to act for and in the name of the person executing it: Promissory note.

(22) "Promissory note" means a promissory note as defined by the Negotiable Instruments Act, 1881 (26 of 1881); It also includes a note promising the payment of any sum of money out of any particular fund which may or may not be available, or upon any condition or contingency which may or may not be performed or happen; Receipt.

(23) "Receipt" includes any note, memorandum or writing-

(a) whereby any money, or any bill of exchange, cheque or promissory note is acknowledged to have been received, or

(b) whereby any other movable property is acknowledged to have been received in satisfaction of a debt, or

(c) whereby any debt or demand, or any part of a debt or demand, is acknowledged to have been satisfied or discharged, or

(d) which signifies or imports any such acknowledgement, and whether the same is or is not signed with the name of any person; Settlement.

(24) "Settlement" means any non-testamentary disposition, in writing, of movable or immovable property made-

(a) in consideration of marriage,

(b) for the purpose of distributing property of the settlor among his family or those for whom he desires to provide, or for the purpose of providing for some person dependent on him, or

(c) for any religious or charitable purpose ; and includes an agreement in writing to make such a disposition and, where, any such disposition has not been made in writing, any instrument recording, whether by way of declaration of trust or otherwise, the terms of any such disposition ; Soldier

(25) "Soldier" includes any person below the rank of non-commissioned officer who is enrolled under the Indian Army Act, 1911 (8 of 1911),

SECTION 03: INSTRUMENT CHARGEABLE WITH DUTY

Subject to the provisions of this Act and the exemptions contained in Schedule I, the following instruments shall be chargeable with duty of the amount indicated in that Schedule as the proper duty therefor, respectively, that is to say-

(a) every instrument mentioned in that Schedule which, not having been previously executed by any person, is executed in India on or after the first day of July, 1899;

(b) every bill of exchange payable otherwise than on demand, or promissory note drawn or made out of India on or after that day and accepted or paid, or presented for acceptance or payment, or endorsed, transferred or otherwise negotiated, in India ; and

(c) every instrument (other than a bill of exchange or promissory note) mentioned in that Schedule, which, not having been previously executed by any person, is executed out of India on or after that day, relates to any property situate, or to any matter or thing done or to be done, in India and is received in India: Provided that no duty shall be chargeable in respect of-

(l) any instrument executed by, or on behalf of, or in favour of, the Government in cases where, but for this exemption, the Government would be liable to pay the duty chargeable in respect of such instrument;

(2) any instrument for the sale, transfer or other disposition, either absolutely or by way of mortgage or otherwise, of any ship or vessel, or any part, interest, share or property of or in any ship or vessel registered under the Merchant Shipping Act, 1894, or under Act 19 of 1838, or the Indian Registration of Ships Act, 1841 (10 of 1841), as amended by subsequent Acts.

SECTION 04: SEVERAL INSTRUMENTS USED IN SINGLE TRANSACTION OF SALE, MORTGAGE OR SETTLEMENT

(1) Where in the case of any sale, mortgage or settlement, several instruments are employed for completing the transaction, the principal instrument only shall be chargeable with the duty prescribed in Schedule I, for the conveyance, mortgage or settlement, and each of the other instruments shall be chargeable with a duty of one rupee instead of the duty (if any) prescribed for it in that Schedule.

(2) The parties may determine for themselves which of the instrument so employed shall, for the purposes of sub-section (1), be deemed to be the principal instrument: Provided that the duty chargeable on the instrument so determined shall be the highest duty which would be chargeable in respect of any of the said instruments employed.

SECTION 05: INSTRUMENTS RELATING TO SEVERAL DISTINCT MATTERS

Any instrument comprising or relating to several distinct matters shall be chargeable with the aggregate amount of the duties with which separate instruments, each comprising or relating to one of such matters, would be chargeable under this Act.

SECTION 06: INSTRUMENTS COMING WITHIN SEVERAL DESCRIPTIONS IN SCHEDULE 1

Subject to the provisions of the last preceding section, an instrument so framed as to come within two or more of the descriptions in Schedule I, shall, where the duties chargeable there under are different, be chargeable only with the highest of such duties: Provided that nothing in this Act contained shall render chargeable with duty exceeding one rupee a counterpart or duplicate of any instrument chargeable with duty and in respect of which the proper duty has been paid.

SECTION 07: POLICIES OF SEA--INSURANCE

[Sub-sections (1), (2) & (3) repealed by Marine Insurance Act, 1963(11 of 1963)-].

(4) Where any sea-insurance is made for or upon a voyage and also for time, or to extend to or cover any time beyond thirty days after the ship shall have arrived at her destination and been there moored at anchor, the policy shall be charged with duty as a policy for or upon a voyage, and also with duty as a policy for time.

SECTION 08: BONDS, DEBENTURES OR OTHER SECURITIES ISSUED ON LOANS UNDER ACT 11 OF 1879

(1) Notwithstanding anything in this Act, any local authority raising a loan under the provisions of the Local Authorities Loan Act, 1879, or of any other law for the time being in force, by the issue of bonds, debentures or other securities, shall, in respect of such loan, be chargeable with a duty of one per centum on the total amount of the bonds, debentures or other securities issued by it, and such bonds, debentures or other securities need not be stamped and shall not be chargeable with any further duty on renewal, consolidation, sub- division or otherwise.

(2) The provisions of sub-section (1) exempting certain bonds, debentures or other securities from being stamped and from being chargeable with certain further duty shall apply to the bonds, debentures or other securities of all outstanding loans of the kind mentioned therein, and all such bonds, debentures or other securities shall be valid, whether the same are stamped or not :

Provided that nothing herein contained shall exempt the local authority which has issued such bonds, debentures or other securities from the duty chargeable in respect thereof prior to the twenty-sixth day of March, 1897, when such duty has not already been paid

or remitted by order issued by the Central Government.

(3) In the case of wilful neglect to pay the duty required by this section, to local authority shall be liable to forfeit to the Government a sum equal to ten per centum upon the amount of duty payable, and a like penalty for every month after the first month during which the neglect continues.

SECTION 08A: SECURITIES DEALT IN DEPOSITORY NOT LIABLE TO STAMP DUTY

Notwithstanding anything contained in this Act or any other law for the time being in force,

(a) an issuer, by the issue of securities to one or more depositories shall, in respect of such issue, be chargeable with duty on the total amount of security issued by it and such securities need not be stamped;

(b) where an issuer issues certificate of security under sub-section (3) of Section 14 of the Depositories Act, 1996 (22 of 1996), on such certificate duty shall be payable as is payable on the issue of duplicate certificate under this Act;

(i) registered ownership of securities from a person to a depository or from a depository to a beneficial owner;

(ii) beneficial ownership of securities, dealt with by a depository;

(iii) beneficial ownership of units, such units being units of a Mutual Fund including units of the Unit Trust of India established under subsection (1) of Section 3 of the Unit Trust of India Act, 1963 (52 of 1963), dealt with by a depository, shall not be liable to duty under this Act or any other law for the time being in force.

Explanation 1.—For the purposes of this section, the expressions "beneficial ownership", "depository" and "issuer" shall have the meanings respectively assigned to them in clauses (a), (e) and (f) of sub-section (1) of Section 2 of the Depositories Act, 1996 (22 of 1996).

Explanation 2.—For the purposes of this section, the expression "securities" shall have the meaning assigned to it in clause (h) of Section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956).

SECTION 09: POWER TO REDUCE, REMIT OR COMPOUND DUTIES

(1) The Government may, by rule or order published in the Official Gazette-

(a) reduce or remit, whether prospectively or retrospectively, in the whole or any part of the territories under its administration, the duties with which any instruments or any particular class of instruments, or any of the instruments belonging to such class, or any instruments when executed by or in favour of any particular class of persons, by or in favour of any members of such class, are chargeable; and

(b) provide for the composition or consolidation of duties in the case of issues by any incorporate company or other body corporate4[or of transfers (where there is a single transferee, whether incorporated or not)] of debentures, bonds or other marketable securities.

(2) In this section the expression "the Government" means-

(a) in relation to stamp -duty in respect of bills of exchange, cheques, promissory notes, bills of lading, letters of credit, policies of insurance, transfer of shares, debentures, proxies and receipts, and in relation to any other stamp -duty chargeable under this Act and falling within entry 96 of List I in the Seventh Schedule to the Constitution, the Central Government;

(b) save as aforesaid, the State Government.

SECTION 10: DUTIES HOW TO BE PAID

(1) Except as otherwise expressly provided in this Act, all duties with which any instruments are chargeable shall be paid, and such payment shall be indicated on such instruments by means of stamps- (a) according to the provisions herein contained; or (b) when no such provision is applicable thereto-as the State Government may by rule direct.

(2) The rules made under sub-section (1) may, among other matters, regulate,-

(a) in the case of each kind of instrument - the description of stamps which may be used;

(b) in the case of instruments stamped with impressed stamps - the number of stamps which may be used;

SECTION 11: USE OF ADHESIVE STAMPS

The following instrument may be stamped with adhesive stamps, namely:-

(a) instruments chargeable with a duty not exceeding ten naye paise, except parts of bills of exchange payable otherwise than on demand and drawn in sets;

(b) bills of exchange and promissory notes drawn or made out of India;

(d) notarial acts ; and

(e) transfers by endorsement of shares in any incorporated company or other body corporate.

SECTION 12: CANCELLATION OF ADHESIVE STAMPS

(1)

(a) Whoever affixes any adhesive stamp to any instrument chargeable with duty which has been executed by any person shall, when affixing such stamp, cancel the same so that it cannot be used again; and

(b) Whoever executes any instrument on any paper bearing an adhesive stamp shall at the time of execution, unless such stamp has been already cancelled in manner aforesaid, cancel the same so that it cannot be used again.

(2) Any instrument bearing an adhesive stamp which has not been cancelled so that it cannot be used again, shall, so far as such stamp is concerned, be deemed to be unstamped.

(3) The person required by sub-section (1) to cancel an adhesive stamp may cancel it by writing on or across the stamp his name or initials or the name or initials of his firm with the true date of his so writing, or in any other effectual manner.

SECTION 13: INSTRUMENTS STAMPED WITH IMPRESSED STAMPS HOW TO BE WRITTEN

Every instrument written upon paper stamped with an impressed stamp shall be written in such manner that the stamp may appear on the face of the instrument and cannot be used for or applied to any other instrument.

SECTION 14: ONLY ONE INSTRUMENT TO BE ON SAME STAMP

No second instrument chargeable with duty shall be written upon a piece of stamped paper upon which an instrument chargeable with duty has already Provided that nothing in this section shall prevent any endorsement which is duly stamped or is not chargeable with duty being made upon any instrument for the purpose of transferring any right created or evidenced thereby, or of acknowledging the receipt of any money or goods the payment or delivery of which is secured thereby.

SECTION 15: INSTRUMENT WRITTEN CONTRARY TO SECTION 13 OR 14 DEEMED UNSTAMPED

Every instrument written in contravention of section 13-orsection 14-shall be deemed to be unstamped.

SECTION 16: DENOTING DUTY

Where the duty with which an instrument is chargeable, or its exemption from duty, depends in any manner upon the duty actually paid in respect of another instruments, the payment of such last mentioned duty shall, if application is, made in writing to the Collector for that purpose, and on production of both the instruments, be denoted upon such first mentioned instrument by endorsement under the hand of the Collector or in such other manner (if any) as the State Government may by rule prescribe.

SECTION 17: INSTRUMENTS EXECUTED IN INDIA

All instruments chargeable with duty and executed by any person in India shall be stamped before or at the time of execution.

SECTION 18: INSTRUMENTS OTHER THAN BILLS AND NOTES EXECUTED OUT OF INDIA

(1) Every instrument chargeable with duty executed only out of India, and not being a bill of exchange or promissory note, may be stamped within three months after it has been first received in India.

(2) Where any such instrument cannot, with reference to the description of stamp prescribed therefor, be duly stamped by a private person, it may be taken within the said period of three months to the Collector, who shall stamp the same, in such manner as the

State Government may by rule prescribe with a stamp of such value as the person so taking such instrument may require and pay for.

SECTION 19: BILLS AND NOTES DRAWN OUT OF INDIA

The first holder in India of any bill of exchange payable otherwise than on demand or promissory note drawn or made out of India shall, before he presents the same for acceptance or payment, or endorses, transfers or otherwise negotiates the same in India, affix thereto the proper stamp and cancel the same: Provided that-

(a) if, at the time any such bill of exchange or note comes into the hands of any holder thereof in India, the proper adhesive stamp is affixed thereto and cancelled in manner prescribed by section 12-, and such holder has no reason to believe that such stamp was affixed or cancelled otherwise than by the person and at the time required by this Act, such stamp shall, so far as relates to such holder, be deemed to have been duly affixed and cancelled;

(b) nothing contained in this proviso shall relieve any person from any penalty incurred by him for omitting to affix or cancel a stamp.

SECTION 20: CONVERSION OF AMOUNT EXPRESSED IN FOREIGN CURRENCIES

(1) Where an instrument is chargeable with ad valorem duty in respect of any money expressed in any currency other than that of India, such duty shall be calculated on the value of such money in the currency of India according to the current rate of exchange on the day of the date of the instrument.

(2) The Central Government may, from time to time, by notification in the Official Gazette, prescribe a rate of exchange for the conversion of British or any foreign currency into the currency of India for the purposes of calculating stamp-duty, and such rate shall be deemed to be the current rate for the purposes of sub-section (1).

SECTION 21: STOCK AND MARKETABLE SECURITIES HOW TO BE VALUED

Where an instrument is chargeable with ad valorem duty in respect of any stock or of any marketable or other security, such duty shall be calculated on the value of such stock or security according to the average price or the value thereof on the day of the date of the instrument.

SECTION 22: EFFECT OF STATEMENT OF RATE OF EXCHANGE OR AVERAGE PRICE

Where an instrument contains a statement of current rate of exchange, or average price, as the case may require, and is stamped in accordance with such statement, it shall, so far as regards the subject-matter of such statement, be presumed, until the contrary is proved, to be duly stamped.

SECTION 23: INSTRUMENTS RESERVING INTEREST

Where interest is expressly made payable by the terms of an instrument, such instrument shall not be chargeable with duty higher than that with which it would have been chargeable had no mention of interest been made therein.

SECTION 23A: CERTAIN INSTRUMENTS CONNECTED WITH MORTGAGES OF MARKETABLE SECURITIES TO BE CHARGEABLE AS AGREEMENTS

(1) Where an instrument (not being a promissory note or bill of ex- change)-

(a) is given upon the occasion of the deposit of any marketable security by way of security for money advanced or to be advanced by way of loan, or for an existing or future debt, or

(b) makes redeemable or qualifies a duly stamped transfer, intended as a security, of any marketable security, it shall be chargeable with duty as if it were an agreement or memorandum of an agreement chargeable with duty under Article No. 5(c) of Schedule 1.

(2) A release or discharge of any such instrument shall only be chargeable with the like duty.

SECTION 24: HOW TRANSFER IN CONSIDERATION OF DEBT, OR SUBJECT TO FUTURE PAYMENT, ETC., TO BE CHARGED

Where any property is transferred to any person in consideration, wholly or in part, of any debt due to him, or subject either certainly or contingently to the payment or transfer of any money or stock, whether being or constituting a charge or in cumbrance upon the property or not, such debt, money or stock is to be deemed the whole or part, as the case may be, of the consideration in respect whereof the transfer is chargeable with ad valorem duty: Provided that nothing in this section shall apply to any such certificate of sale as is mentioned in Article No. 18 of Schedule 1. Explanation: In the case of a sale of property subject to a mortgage or other incumbrance, any unpaid mortgage money or money charged, together with the interest (if any) due on the same, shall be deemed to be part of the consideration for the sale: Provided that, where property, subject to a mortgage is transferred to the mortgagee, he shall be entitled to deduct from the duty payable on the transfer the amount of any duty already paid in respect of the mortgage. Illustrations (1) A owes B Rs. 1,000. A sells a property to B, the consideration being Rs. 500 and the release of the previous debt of Rs. 1,000. Stamp duty is payable on Rs. 1,500. (2) A sells a property to B for Rs. 500 which is subject to a mortgage to C for Rs. 1,000 an unpaid interes

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