Amendments to the Indian Stamp Act, 1899
- Blog|Indian Acts|
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- By Taxmann
- Last Updated on 7 April, 2021
1. Govt. to designate collecting agencies for collecting stamp duty on instruments of transaction in stock exchanges:
1.1 In case of instruments of transactions in stock exchanges and depositories
The Finance bill proposes to insert “Part AA – liability of instruments of transactions in stock exchanges and depositories to duty” to the Stamp Act, 1899. In this part new section 9A has been proposed to be included which provides that stamp duty on sale of any securities through stock exchange or depository shall be collected from buyer on behalf of State Government by the authorised stock exchange or a clearing corporation or depository as the case may be. The duty will be collected on basis of the market value of the securities at time of settlement of transactions in securities of such buyer. The collecting agency such as stock exchange, clearing corporation or depository as the case may be shall have to transfer the collected stamp duty to the State Government within three weeks of end of each month. The duty will be transferred to the State in which the buyer resides if the buyer is outside India then the State Govt. having registered address of the trading member or broker shall receive the duty.
1.2 In case of issue of securities other than through stock exchange or depository:
In case of issue of securities made by issuer otherwise than through a stock exchange or depository the stamp duty on each such issue shall be payable by the issuer at a place his registered office is situated. The duty will be calculated on the market value of the securities so issued at rate specified in Schedule I.
2. Stringent penalty upon collecting agencies for failure to collect duty:
A new section has been introduced with respect to collecting agencies which provides for a penalty of not less than Rs. 1 Lakh which can be extended to 1% of the collection so default against collecting agencies who fails to collect the duty or fails to transfer the same within 15 days of the specified time period.
3. Change in Stamp duty:
Now the stamp duty on issue of debenture will be 0.005% and in case of re-issue it will be 0.0001%. Existing duty structure is 0.05% per year of the face value of the debenture subject to the maximum of 0.25% or Rs. 25 lakhs whichever is lower where the debenture are transferred by way of delivery or by an endorsement or by separate instrument of transfer.
Security (other than debenture):
a) Issue of security other than debenture – 0.005% (currently the issuance is charged as per State schedule, which is generally @0.1%), b) transfer of security other than debenture on delivery basis – 0.015% , c) Transfer of security (other than debenture) on non delivery basis – 0.003%, d) other derivatives – 0.002% e) Govt. Securities- 0%, f) Repo on Corporate Bonds- 0.00001%.
Futures – 0.002%, Options – 0.003%, Currency and interest rate derivatives – 0.0001%, Other derivatives at 0.002%
4. Amendment to the key Definitions:
Now the definition of instrument has been expanded to include electronic document created for a transaction in a stock exchange or depository by which any right or liability is or purports to be, created, transferred, limited, extended, extinguished or recorded and any other document mentioned in Schedule I.
“Debenture” – includes i. Debenture stock, bonds or any other instrument of a company evidencing a debt, whether constituting a charge on the assets of the company or not; ii. Bonds in the nature of debentures issued by any incorporated company or body corporate; iii. Certificate of deposit, commercial usance bill, commercial paper and such other debt instrument of original or initial maturity up to one year, as the Reserve Bank of India (RBI) may specify from time to time; iv. Securitised debt instruments; and v. Any other debt instruments specified by the Securities and Exchange Board of India from time to time.
‘Debenture’ has been excluded from definition of Bonds:
“Debenture” has been excluded from the definition of “bonds.” Now, with this amendment, stamp duty on “Debentures” will become chargeable only under Article 27 (Union list) of the Act.
“Securities” includes i. Securities, as defined in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956 ii. A “derivative,” as defined in clause (a) of section 45U of the RBI Act, 1934 iii. A certificate of deposit, commercial usance bill, commercial paper, repo on corporate bonds and such other debt instruments of original or initial maturity up to one year as the RBI may specify from time to time, and iv. Any other instrument declared by the Central Government, by notification in the Official Gazette, to be securities for the purposes of this Act.
5. Stamp Duty on transfer of dematerialised securities:
Transfer of securities in demat form between beneficial owners was earlier exempted from stamp duty provisions under section 8A(c)(ii) & (iii) of the Act. The same has now been deleted and the exemption is only limited to transfer of securities from a person to a depository or from a depository to a beneficial owner. The rates proposed for stamp duty on transfer of securities are as follows: a)Transfer and re-issue of debentures – 0.0001% b)Transfer of security (other than debenture) on delivery basis – 0.015%
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