STAMP
DUTY ON TRANSFER Before the instrument of transfer is lodged
with a company, it should be duly stamped, according to the Indian Stamp Act,
1899. This is a Central Act, which all the states have adopted with modifications
to suit their requirement. In regard to share transfers, the levy of stamp
duty has been allocated, by schedule VII, Entry 91, appended to the "constitution
of India", and therefore only the Central Government can levy stamp duty
on share transfers. AMOUNT (entry 62, schedule I, of Indian stamp act,
1899) The Government has prescribed a stamp duty of, Rs.0.75 for every
hundred rupees (100 RS.) or part thereof the value of the share, i.e. the price
at which shares were brought (commission price), and not the face value of shares
under transfer. Violation of this provision will attract penal provisions
to the company, under stamp Act. In case of gift of shares there is a necessity
to mention the consideration as the shares are being transferred free of consideration.
However, stamp duty thereon will have to be paid on the basis of the market value
of the shares on the date of the gift.
HOW IS THE INSTRUMENT IS TO
BE STAMPED?
The stamp duty on the share transfer is payable by affixing
on the instrument special adhesive stamps bearing the inscription "store
Transfer". The stamps affixed on an investment of transfer should be cancelled
before it is lodged with the company. Cancellation can be done by the transferor
by signing across the stamp or in any other manner to ensure that the stamp cannot
be used once again. The stamping has to be done by transferor unless there
is a contract to the contrary.
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