Stamp Duty Payment on Agreements

Narendra Kumar

31 Jan, 2020

Agreements that Mandate Payment of Stamp Duty

Any instrument that records transaction requires stamp duty to be paid on it. Stamp Duty (Stamp Duty Payment) proves to be an evidence for the transaction and can also be admitted in a court of law. The Stamp Act 1899 was introduced by the Government of India and from time to time amendments are being made. Stamp Act provides 2 lists for levying stamp Duty i.e.

• Union List.
• State List.

The items which are mentioned in the Union list on that item duty will be levied by the Union Government and the items which are mentioned in the State List, the state government shall charge the duty on the same.

Following are the items which are mentioned in the Union List:

1. Bills of Exchange.
2. Bill of Lading.
3. Letter of Credit.
4. Insurance Policies.
5. Share Transfer.
6. Receipts and Proxies.
7. Promissory Notes.

Apart from the list mentioned in the Union list, all other duties shall be paid to the State Government.

Business Agreements that will Require Stamp Duty Payment:

• Memorandum of Association and the Article of Association: A Memorandum of Association is the charter of the company. These are important documents of the company which is required at the time of the company incorporation. The stamp duty payment to be levied on the articles or the memorandum is decided on the basis of the authorized capital of the company.
• Limited Liability Partnership Agreement: As the limited liability partnership agreement defines the liability of all the partners. The liability of all the partners is limited to the share contributed by them. The stamp duty to be paid by the partners depends upon the share capital of the partnership firm and the state where the registered office of the firm is situated.
• Partnership Agreement: The partnership agreement defines the roles and responsibilities of all the partners and the profit & loss sharing ratio of the partners. On partnership agreement, the stamp duty payment to be paid is ₹ 1000.
• Transfer of Shares: As per the Indian Stamp Act the stamp duty to be paid on the share transfer of Rs.25 paisa on per INR 100. Stamp duty paid on the transfer of shares varies from state to state.
• Promissory Note: Promissory Note is the note which promises to pay a certain sum of money at a future date in exchange for some goods or services. Stamp Duty payment  is required to be paid for