Published: 18th Jan, 2024
Context
The government has proposed repealing the Indian Stamp Act, 1899 and bringing in a new legislation for the stamp duty regime in the country.
More on the News
- Department of Revenue under the Ministry of Finance has invited suggestions on the draft ‘Indian Stamp Bill, 2023’ from the public.
- The Intent is to align it with the modern stamp duty regime. Once enacted, the Bill shall replace the Indian Stamp Act, 1899.
What is a Stamp Duty?
- It is a tax, similar to income tax, collected by the government. Stamp duty is payable under Section 3 of the Indian Stamp Act, 1899.
- 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 instrument / document is considered a proper and legal instrument / document and has evidentiary value and is admitted as evidence in courts. Document not properly stamped, is not admitted as evidence by the court.
The Indian Stamp Act
- The Indian Stamp Act 1899 lays down the legal provisions for tax levied in the form of stamps on instruments recording transactions.
- Stamp duties are levied by the central government, but within the states are collected and appropriated by the concerned states in terms of provisions of Article 268 of the Constitution.
- The stamp duties on documents specified in entry 91 of the union list of the Seventh Schedule. The seventh schedule deals with division of subjects among Union and States.
- Stamp duty is levied on instrument recording transaction including bills of exchange, cheques, promissory notes, bills of lading, letters of credit, policies of insurance, transfer of shares, debentures, proxies and receipts are levied by the Union.
Why it is being repealed?
- It is a pre-Constitution Act and has been amended from time to time to enable a more modern stamp duty regime.
- However, a number of provisions contained in the Indian Stamp Act, 1899 have become redundant/ inoperative and hence, it need to reflect the present realities and objectives there is a need to re-orient the Indian Stamp Act, 1899.
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