A live project on stamp duty submitted to Faculty of Management Studies The ICFAI University Tripura By Surajit Roy ID:

11 ATPA0 27 MBA 2nd semister

The ICFAI University Agartala-799210 Tripura (west).

A project report On A Study on stamp duty

Submitted in partial fulfillment of the requirement for the award of degree

Of Master of Business Administration Of Icfai University Tripura Session 2011-2013

Submitted by Surajit Roy Id no 11ATPA027

Under the Guidance of Mr Shashi Sharma Faculty of management studies Icfai University Tripura Agartala-799210

Acknowledgement A heart-full of gratitude expressed in words for an excellent Faculty Sir Shashi Sharma. I could complete this project only because of the helpful hand rendered by my Teachers, Parents & Well-wishers.I am very Greatful to my LEB faculty for his benevolent guidance & care without which it would have been impossible for me to complete this Project. Lastly I am Greatful to the people, I like to spend time with yes my Friends, they helped me to have fun as we enjoyed this Project, this company and helped widen our mental spirit. If this project any how attracts the learned people my effort would be rewarded.

Thanking You Surajit Roy

Contents

Title
INTRODUCTION CONCEPT IMPORTANCE OF CONCEPT IN BUSINESS REVIEW OBJECTIVES PRIMARY SURVEY RELATION OF THEORY AND ACTUAL THINGS PRACTICED FINDINGS CONCLUSION SUGGESTIONS REFERENCE

Pg. No.
4 46 68 8 11 11 11 11 12 12 12 13 13

List of tables

Title STAMP DUTY RATES FOR DIFFERENT STATES IN INDIA REVENUE FROM STAMP DUTY FOR PAST FEW YEARS

Pg. No. 5 7

Introduction Stamp duty is a excise that was sited on all sorts of documents. The document has to bare a physical stamp or impression to show the tax was paid for. These days a physical stamp is not required to show proof. Stamp duty is used when you are purchasing a house, or some type of property that is paid such as taxes on a new or used car. If you are buying a home or any property, you are going to be taxed. And that tax known as stamp duty after the representative stamps used to certify its payment is paid at different rates depending on the value of the property.

Concept The Indian Stamp Act, 1899 (the Indian Stamp Act) was introduced to combine and amend the law relating to stamps. It extend to the whole of India, except the State of Jammu and Kashmir. Section 2(14) of Indian Stamp Act, 1899 defines the instrument as every document by which any right or legal responsibility is or supposed to be created, transferred, limited, extended, extinguished or recorded.The Indian Stamp Act, 1899 defines the term duly stamped as apply to an mechanism. The saying means that the instrument bears an adhesive or impressed stamp of not less than the actual amount and that such stamp has been affix or used in according to law for the time being in power. The Finance (No. 2) Act, 2004 inserted the definition of stamp as any spot, seal or support by any organization or person duly authorised by the State Government, and includes an glue or impressed stamp, for the purpose of responsibility on account under Indian Stamp Act, 1899. Stamp Duty Rates in India Table 1 :- represents Stamp Duty Rates for different states in INDIA STATES Andhra Pradesh Assam Bihar Goa Gujarat RATES (%) 5 8.25 9 8 10 STATES Maharashtra Meghalaya Nagaland Orissa Punjab RATES (%) 10 4.6-9.9 7.5 14.7 6

Haryana Himachal Pradesh Karnataka Kerala Madhya Pradesh Manipur

12.5 8 10.5 8.5 7.5 7

Rajasthan Tamil Nadu Tripura Uttar Pradesh West Bengal Delhi

10 8 5 10 17 8

Importance of the concept in business The Indian Stamp Act, 1899 is a Central government enactment and States have powers to adopt the Indian Stamp Act, 1899 with amendments to the same to outfit the business to each State. Section 3 of the Indian Stamp Act, 1899 is the charging section and stipulate that stamp duty has to be paid on the property provided in Schedule I to the Indian Stamp Act, 1899. Certain States have introduced Schedule IA to the Indian Stamp Act, 1899 being the stamp duty payable in that State. States such as Gujarat, Maharashtra, Karnataka, Kerala and Rajasthan have their separate State Stamp Acts. While many States follow the 1899 legislation. However, where stamp duty is to be paid on certain instruments is not covered in the individual State Stamp Act, the States refer to the stamp duty rates provide in the Indian Stamp Act, 1899 for such instruments.The stamp papers amazed with the required amount of stamp duty are used together for judicial and non-judicial purposes as described here in below: 1. Judicial Stamp (court fee stamp): Stamps which are used in courts i.e. for applications, petition etc., are judicial stamp papers and in normal parlance are called court fee stamps. 2. Non-Judicial Stamp: Non-judicial stamp is the instant common form of stamp used all over the country to register deeds, contracts and other instruments. This kind of stamp is printed on the paper in various prices, such as Rs. 50, Rs. 100, Rs. 1,000, Rs. 5,000. 3. Revenue Stamp: Revenue stamps are used for acknowledging the receipt of money.
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4. Notarial Stamp: Notarial stamps are used by a Notary Public who is a duly appointed officer whose function is to draw, attest and certify deeds, conveyances and Powerofattorney usually under his official seal along with the notary stamp (Article 42 of the Indian Stamp Act, 1899) 5. Special adhesive stamp: The Special adhesive stamps are non-judiciary stamps used in certain financial instruments such as bills of exchange, cheques, promissory notes, instruments of transfer of shares and transfer of debentures (Rule 17 of the Indian Stamp Rules, 1925. 6. Foreign bill stamp: Foreign bill stamp is a special adhesive stamp bearing the words Foreign Bill. Such kind of stamp is generally used in case of bills of exchange and promissory note drawn out of India (Rule 17(a) of the Indian Stamp Rules, 1925). 7. Brokers note: Brokers note is a special adhesive stamp bearing the words Brokers Note. Such kind of stamp is used in case of transactions through brokers or agent to his principal intimating the purchase or sale on account of such principal (a) if any goods exceeding Rs. 20. (b) of any stock or marketable security exceeding Rs. 20 (Article 43 of the Indian Stamp Act, 1899.) 8. Insurance Policy stamp: This kind of stamp is used by the insurance department to authenticate the insurance policies. 9. Share transfer stamp: This kind of stamp is used by financial institutions in respect of transactions pertaining to Shares (Article 62 of the Indian Stamp Act, 1899
Revenues from stamp duty on shares compared with other taxes
Public sector receipts in constant 200001 prices, billion Table 2 :- represents revenue from Stamp Duty for past few years

STAMP DUTY 1988-89 1989-90 1990-91 1991-92 1992-93 1993-94 1.1 1.3 0.9 1.1 1.0 1.3

CORPORATION OTHER TAX 29.2 31.4 28.6 23.2 19.4 18.0 TAXES 277.2 373.1 262.7 267.3 257.3 263.7

TOTAL

307.5 305.7 292.2 291.5 277.7 283.0

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1994-95 1995-96 1996-97 1997-98 1998-99 1999-2000 2000-01

1.2 1.5 1.6 2.1 2.6 3.8 4.5

22.9 26.9 31.0 32.8 31.4 35.3 32.4

276.4 286.2 289.4 307.7 320.4 332.3 346.1

300.5 314.6 321.9 342.7 354.5 371.5 383.0

Review CASE : State of U.P. & Others. Anr. .... Respondents on 25.01.2007 .... Appellant (s) V/s Ambrish Tandon &

FACTS : a) A Sale Deed dated 16.04.2003 was executed between Har Charan Singh and the respondents herein in respect of the property situated at 17/1 Ashok Marg, Lucknow measuring 11,029 sq. ft. and registered as Sale Deed Document No. 5341 of 2003. The total value of the property was computed as Rs. 1,55,28,860/- for the purposes of Stamp Duty and the respondents herein paid Rs. 15,53,000/- as stamp duty. b) The District Magistrate, Lucknow made a spot inspection of the property in question on 21.07.2003. During inspection, the land has been found having an area of 12,099 sq. ft. with a two storey building having an area of 5,646.3 sq. ft. at ground floor and an area of 5192.3 sq. ft. at the first floor. In the inspection report, the property in question has been valued for Rs. 3,87,74,097/- and the stamp duty on the said property has been calculated by the competent authority as Rs. 38,78,000/-. However, at the time of purchase, respondents herein paid Rs. 15,53,000/- as Stamp duty, hence a deficiency of Rs. 23,50,000/- has been pointed out by the authorities. The District Magistrate, vide report dated 26.07.2003, directed to register a case against the respondents herein c) On the basis of the aforesaid report, Case No. 653 Stamp-2003 under Sections 47A/33 of the Indian Stamp Act, 1899 (in short the Act) was registered. Vide order dated 27.09.2004,
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the Additional Collector (Finance & Revenue) Lucknow directed the respondents to make good the deficiency in the stamp duty and also imposed a penalty amounting to Rs. 8,46,000/for such tax evasion. On 20.01.2005, for failure to deposit the aforesaid amount, a demand notice claiming an amount of Rs. 38,30,500/- plus 10% recovery charges was issued and the respondents herein were directed to pay the said amount within a period of seven days. d) Being aggrieved by the order dated 27.09.2004 and demand notice dated 20.01.2005, the respondent filed a writ petition being No. 732 of 2005 before the High Court. By order dated 25.01.2007, the High Court, while allowing the petition filed by the respondents herein issued a writ in the nature of certiorari quashing the impugned order dated 27.09.2004 passed by the Additional Collector (Finance & Revenue), Lucknow and the demand notice dated 20.01.2005. e) Aggrieved by the said decision, the State has preferred this appeal by way of special leave petition before this Court. 4) Heard Mr. Shail Kumar Dwivedi, learned Addl. Advocate General for the appellant-State and Mr. K.V. Viswanathan, learned senior counsel for the respondents. 5) The only question for consideration in this appeal is whether the High Court is justified in interfering with the order dated 27.09.2004 passed by the Additional Collector (Finance and Revenue), Lucknow demanding differential stamp duty with interest and penalty in respect of the sale deed dated 16.04.2003 executed in favour of the respondents herein. According to the respondents, through a registered Sale Deed dated 16.04.2003 they have purchased the house No. 17/1 Ashok Marg, Lucknow for a total sale consideration of Rs.1.5 crores on which required stamp duty of Rs. 15.53 lakhs was paid. When the Additional Collector issued a notice under Section 47A/33 of the Act, the respondents submitted objection dated 29.08.2003 stating that the extent, area and valuation are in accordance with the revenue records and the stamp duty paid by them on the sale deed was proper. It is also stated by the respondents that before passing the order dated 27.09.2004, the Additional Collector (Finance and Revenue) Lucknow has not afforded sufficient opportunity to them and the impugned order was passed in a most arbitrary manner ignoring the objection submitted by them. It is also stated that at the time of sale deed the house was a residential property and in order to avoid unnecessary harassment at the hands of the revenue and for the purpose of stamp duty and registration they had valued the said property at the rate fixed by the Collector, Lucknow treating the land as commercial at the rate of Rs.11, 300 per sq. metre. In other words, for the
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purpose of stamp duty and registration, according to the respondents, they added additional 10% to the value. CASE : Gemmini Silk Limited V/S Gemini overseas Limited FACTS The development of case law in West Bengal has been somewhat mixed. A single judge of the Calcutta High Court held in Gemini Silk Limited v. Gemini Overseas Limited, 2003 53 CLA 328, that an order sanctioning a scheme of amalgamation under section 394 is covered by the definition of conveyance under the Indian Stamp Act and therefore liable to stamp duty. That was the case even though conveyance was not defined to expressly include an order of amalgamation. Subsequently though, a Division Bench of the Calcutta High Court adopted a contrary view in Madhu Intra Limited v. Registrar of Companies, (2006) 130 Comp. Cas. 510, where it was held that an order of amalgamation was not subject to stamp duty, because it did not fall within the definition of a conveyance; moreover even if such an order were to be taken as a conveyance or an instrument the transfer of assets and liabilities effected thereby is purely by operation of law. The Division Bench even went to the extent of expressly setting aside the order and judgment of the single judge in the Gemini Silk case. In an interesting development, a single judge of the High Court at Calcutta has last week decided in Re Emami Biotech and Others that stamp duty is payable on schemes of arrangement involving transfers even in the state of West Bengal. This is despite the holding of the division bench in Madhu Intra to the contrary. The reasons are elaborated in the judgment: It must be respectfully observed in the context that in the light of the judgment in Hindustan Lever, the view expressed in Madhu Intra does not hold good. The judgement in Madhu Intra did not notice the Supreme Court pronouncement in Hindustan Lever. If the Division Bench of this court had noticed Hindustan Lever and had still rendered the opinion in Madhu Intra, it would have been binding on the company Judge of this court. But in Madhu Intra not noticing Hindustan Lever and it being apparent that the question has been answered otherwise by the Supreme Court, it is the Supreme Court view that has to be followed. CASE: SE Investments v Union of India FACTS In a significant decision in SE Investments v Union of India, the Delhi High Court has held that in the absence of a specific provision in the Indian Stamp Act (Delhi amendment) providing for charging of stamp duty on increase in the authorized share capital of a company, no stamp duty can be levied on such increase. The Court has drawn a distinction between the Delhi amendment and other state amendments to the Indian Stamp Act, 1899. Whereas the state amendments to the Indian Stamp Act, 1899,
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for states other than Delhi (such as Rajasthan, Madhaya Pradesh and Andhra Pradesh) specifically provide for levy of stamp duty in case of increase in authorized share capital of a company, Article 10 of Schedule 1A of the Indian Stamp Act (Delhi Amendment) only provides for levy of stamp duty (a) where the authorized share capital of the company does not exceed Rs. 1 lac (b) in other cases. Here, the phrase in other cases cannot be interpreted to include increase in authorised share capital of a company. Thus, the Court has held that as per the Delhi amendment of the Indian Stamp Act, 1899 no stamp duty can be charged on increase in authorized share capital for a company registered in Delhi.

Objectives of the study 1. To know the types of stamp duty 2. To know the cases on stamp duty

Primary survey Organization HIGH court SDM Office DC Office To conduct this study I went to above places and there consulted with the

advocates , district collector and tried to determine the relative between the assumption and actual thing accomplished.

Relation of the theory and actual things practised Through my study of the topic stamp duty and with the experience of my survey among the lawyers of district court I think there is positive relation between theory and actual thing practised. When I asked them questions related to theory and actual things practiced their reply was that they are following the mentioned rules and regulations and it

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would be impossible for them to do the job if they will not go as per the theory. But they also agreed that some flexibility in law is provided based on the situation.

Findings There slight difference in Theory and practise : Sometimes law is practise in flexible manner Mostly the concept mentioned in books are practised in totaly

Conclusion The purpose of enacting such an Act is to raise revenue for the local governments. Additionally, payment of stamp duty imparts legality to the document and this can be submitted as an authentic document in courts. It is a tax, similar to sales tax (VAT) and income tax collected by the Government. Stamp Duty is payable under section 3 of the Indian Stamp Act, 1899. Rates of Stamp Duty payable for different types of documents are as per Schedule I. Stamp Duty must be paid in full and on time. If there is a delay in payment of stamp duty, it attracts penalty. A stamp duty paid document gets evidentiary value and is admitted as evidence in court. Document not properly stamped, is not admitted as evidence by the Court.

Suggestions There are many serious Governmental issues that arise with the stamp duties. Various reforms that address these administrative problems have also been suggested by these studies. There is widespread agreement that the values declared for stamp duty transactions are grossly understated, due largely to the extremely high duty rate on conveyances. For example in Maharashtra it is estimated that 70 percent of stamp duty documents are undervalued by 20 percent or more. Other observers claim that undervaluation may approach 50 percent for many kinds of transactions. Avoidance because of the high stamp duty burdens, individuals have found a variety of ways to avoid legally the tax burden. The use of an instrument of release in which a co-owner releases his or her share to another co-owner in exchange for some consideration, The exchange of properties of much different values, the splitting of one property into smaller properties to avoid higher stamp duty rates; and The registration of properties in neighbouring, lower-tax States Evasion. The high stamp duty rates have also created a strong incentive for individuals to evade illegally the tax burden. As a student of law some more things I like to suggest are :-

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Every time it is not possible to follow the exact rules and regulations. So flexibility must be provided according to situations.

Some training program should be conducted for the lawyers, especially for the fresher.

The experienced lawyer should help the new ones so that they can perform their job smoothly.

Refference http://www.indiankanoon.org/search/?formInput=cases+on+stamp+duty+in+india http//www.stamp-duty-payable-p43311.html

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