A stamp duty is a government-imposed tax applied to the registration of documents, such as agreements or transaction papers involving two or more parties, with the registrar. Recently government had announced amendments in Stamp Act of 1899. The Indian government has suggested the abolition of the Indian Stamp Act, 1899, and is considering introducing a new legislation for the stamp duty system.
Scope of Stamp Act 1899:
Stamp duties apply to a variety of documents, such as bills of exchange, cheques, promissory notes, bills of lading, letters of credit, insurance policies, share transfers, debentures, proxies, and receipts.
Indian Stamp Act, 1899 Features:
Fiscal Legislation:
The Act functions as a fiscal statute, governing the imposition of taxes through stamps on instruments used for recording transactions.
Instrument Definition:
Section 2 of the Act defines an “instrument” as any document creating, transferring, limiting, extending, extinguishing, or recording any right or liability.
Stamp Characteristics:
A “stamp” includes any mark, seal, or endorsement authorized by the State Government for the Act’s duty purposes, encompassing adhesive or impressed stamps.
Taxable Instruments:
Section 3 of the 1899 Act specifies that certain instruments or documents are chargeable with amounts listed in Schedule 1 of the Act, including bills of exchange and promissory notes.
Why is government amending Stamp Act 1899?
Redundancy and Inoperability:
The Ministry of Finance highlights the redundancy and inoperability of several provisions within the Indian Stamp Act, 1899.
Lack of Uniformity:
The absence of provisions for digital e-stamping and the lack of consistent stamp duty legislation across Indian states necessitate a new law.
The current stamp duty law is antiquated and fails to encompass contemporary instruments like digital signatures and, e-stamping uniformly across states, resulting in potential litigation and confusion.
Additionally, the existing law does not adequately address newer financial instruments in the digital realm.
Changes in Stamp Act:
Empowerment for New Instruments:
The proposed Bill includes provisions empowering both states and the Centre to introduce new instruments for the imposition of stamp duty as needed.
Removal of Duty Exemption:
It suggests the removal of duty exemption for ships and vessels.
Revision in Market Value Determination:
The draft bill introduces a provision to revise the determination of market value in lease cases involving the transfer of property rights and mining leases.
Monetary Threshold Adjustments:
Increase in Thresholds: Several changes in monetary thresholds are proposed, such as increasing the threshold for issuing revenue receipts to Rs 1,000 from Rs 20.
Collector’s Application Fee: The collector’s application fee is also raised significantly, from Rs 5 to Rs 1,000, as outlined in the draft bill.
Penalty Enhancements:
Substantial Increase: The bill suggests a substantial increase in the penalty amount, from Rs 5,000 to Rs 25,000, for non-payment of stamp duty, and imposing a daily penalty of Rs 1,000 for repeated offenses.
Scrutiny of Undervalued Properties: Additionally, it introduces provisions to scrutinize undervalued properties, removing the time limit for inquiry.
Digital Advancements:
Digital E-stamping: Digital advancements are addressed in the draft bill, introducing provisions for digital e-stamping.
Conclusion:
In essence, the ‘Indian Stamp Bill, 2023’ aims to create a more responsive, uniform, and adaptable stamp duty framework, fostering smoother transactions and compliance in the country’s evolving financial landscape.