Choice of method of
paying stamp duty is dependent on the state in which stamp duty is to be paid
Ms.
Shabnum Kajiji, Wadia Ghandy & Co
Advocates, Solicitors and Notaries
For registered
documents, which stamp duty payment method is more advisable among e -
stamping, franking and paper-based and why?
—Mr. S. Majumdar
While responding to
this query, we are assuming that you are referring to documents which are yet
to be registered as it is not be possible to register a document without paying
adequate stamp duty as per the existing stamp duty laws in India. It is important
to note that in India, stamp duty laws differ from state to state.
As noted by you, some
of the methods by which stamp duty may be paid on instruments are by means of
papers bearing impressed stamps (non-judicial stamp paper), by means of a
franking machine or by e-stamping. However, not all states in India provide
facilities for use of all the aforesaid methods.
However, assuming
that all three (3) methods are available in a particular state, legally there
will not be any distinction & the choice of methods will be determined only
from a practical perspective.
Paper-based method..!
Payment of stamp duty
by means of non-judicial stamp paper is the traditional method of payment. The
instrument which is to be stamped is to be written / printed on a such stamp
paper(s).
Alternatively, a
blank stamp paper(s) can be affixed to the instrument and signed by the
executants or one of the executants with an endorsement indicating that such
stamp paper is attached to the sheet on which the instrument is written and
forms an integral part of the instrument.
The benefit is that
being the traditional method of stamping documents, people are generally
familiar with the process of obtaining stamp papers from licenced vendors.
Another benefit is that you can purchase and affix a stamp paper to an
instrument written/printed on plain paper even a day after execution of the
instrument unlike the franking method which requires the document to be
unsigned at the time of franking. However, please note that this is possible
only where a particular state stamp law allows for a document to be stamped
after it has been executed (example, the Maharashtra Stamp Act, 1958 allows for
a document to be stamped either before execution, on the day of execution or on
the day immediately following execution).
The disadvantages of
stamp papers are:
•• Stamp papers can
be purchased from licenced vendors only. Often, stamp papers are not readily
available especially in large denominations. The stamp vendors can sell stamp
papers of face value of only up to Rs.10,000 to a person at a time.
•• Stamp papers which
are bought for future use may get spoilt and become unusable. Allowance of such
stamp papers may be claimed from the stamp authorities in the relevant state
but this would be a time-consuming exercise.
•• Stamp papers must
be bought in the name of one of the parties and if a party is a company then
the stamp bearing the registered address of such company will also be required.
•• There is a risk of
purchasing fake stamp papers from unlicenced vendors.
•• If the stamp duty
payable is of a large amount, then an onerous number of papers may be required
to constitute the entire duty.
•• For unused stamp
papers, refund must be claimed within six months from the date of purchase of
the stamp paper.
E-stamping..
E-stamping is a computer-based application
& electronic way of paying stamp duty. The facility of e-stamping is not
available in all states and Union territories.
To avail the
facility, one needs to fill up an application form available at authorized
collection centres (ACCs) for stamp duty payment. The application form will
contain certain details of parties and the transaction in respect of which the
instrument is to be executed. This form is to be submitted along with the
amount for which the stamp certificate is sought and the amount can be paid by
way of cash, cheque, demand draft, pay order, Real-time Gross Settlement
System, National Electronic Funds Transfer or account to account transfer.
Note that ACCs are
generally certain scheduled banks and post offices which have been authorized
for this purpose by the Stock Holding Corp. of India Ltd which is, currently,
the only agency appointed by various governments for e-stamping application
operations and maintenance.
One of the benefits
of e-stamping is that the e-certificate can be availed relatively quickly (in
case of payment by cash/demand draft) and that it is a relatively secure method
(every e-certificate has its own unique identification number and can be
verified for its authenticity). Another benefit is that e-stamping can be done
even after the instrument has been executed, unlike franking.
Drawbacks of
e-stamping are that in case the e-stamp is misplaced, a duplicate copy of the
same cannot be issued and if the e-stamp needs to be cancelled for refund, it
can only be cancelled at the stamp offices and not at ACCs.
Franking..
The third method of
paying stamp duty is by means of a franking machine. For franking, the
instrument is to be printed on plain paper and before the parties execute the
instrument, it is taken to an authorized bank or / other authorized franking
agency where an application form is to be submitted, stamp duty is to be paid
and a stamp is affixed on the paper indicating the value of the stamp duty.
The benefit of
availing franking as a mode of payment of stamp duty is that it is quick (in
case of payment by cash/demand draft).
The few drawbacks of
franking are that it can be done only before execution of the document and may
involve a nominal franking charge.
Further, most banks
accept only cash as a mode of payment for smaller amount and only instruments
such as pay order for a higher amount. Also, there are no uniform rules for these
authorized banks/post offices and the rules may vary from state to state and
sometimes even from one bank to another within a state. Franking is usually
done during the limited working hours of the banks and post offices.
We understand that
franking facility is readily available only in certain states.
While an instrument
may be stamped by e-stamping, franking or with papers bearing impressed stamps,
it is noted that in certain states such as Maharashtra, all stamps, however
purchased, if not used or no allowance has been claimed in respect thereof
within a period of six months from the date of purchase, will be rendered
invalid.
In conclusion, the
choice of method of paying stamp duty is largely dependent on the state in
which the stamp duty is to be paid and the amount of such stamp duty. For
payment of a smaller amount of duty, it may be more convenient to purchase
stamp papers of a small denomination and execute the instrument on such stamp
paper.
However, for a larger
amount of stamp duty, it may be preferable to opt for e-stamping or franking,
depending on whether such facility is available in the relevant state.
About the author
Ms. Shabnum Kajiji is
Partner at Wadia Ghandy & Advocates, Solicitors and Notaries
Src: Mint
No comments:
Post a Comment