The Indian Stamp Act, 1899

Chapter - I: Preliminary (Sections 1-2)

Section 1: Short Title, Extent, and Commencement
1. Title
• The Act is officially titled the Indian Stamp Act, 1899.
2. Extent
• Originally applicable to all of British India.
• Post-independence, the Act applies to the entire territory of India, with state-specific
amendments to reflect local needs and conditions.
3. Commencement
• Came into force on July 1, 1899.
4. Adaptations
• States have the power to modify or add provisions to this Act. For instance:
o Rates of stamp duty differ between states, as specified in their respective
amendments.
o Some states have introduced e-stamping for convenience.

Section 2: Definitions
Section 2 provides definitions of critical terms used throughout the Act. These definitions clarify
the scope and interpretation of the provisions.
1. Key Definitions
1. Banker
o Includes any company, institution, or individual acting as a banker.
2. Chargeable
o Refers to instruments subject to stamp duty under the Act.
3. Collector
o A government officer authorized to perform duties under the Act, such as
impounding documents or collecting stamp duty.
4. Duly Stamped
o A document is deemed duly stamped if it bears the appropriate amount of stamp
duty as per the Act.
5. Executed and Execution
o Relates to the signing of an instrument to make it legally enforceable.
6. Impressed Stamp
 o A stamp embossed or engraved on paper by the government to denote payment
of duty.
7. Instrument
o Defined broadly to include any document by which rights or liabilities are created,
transferred, or extinguished.
o Examples: agreements, bonds, leases, deeds, mortgages, and affidavits.
8. Marketable Security
o A document representing ownership in a company or government and capable of
being traded, such as stocks or bonds.
9. Policy of Insurance
o Refers to a document evidencing a contract of insurance.
10. Stamp
o Covers both impressed stamps (engraved on paper) and adhesive
stamps (pasted on instruments).
11. Valuation Date
o The date on which the market value of a property or instrument is assessed for
determining stamp duty.

Importance of Chapter-I
1. Clarity and Scope
o Establishes the fundamental terms and scope, making the Act easier to understand
and implement.
2. Uniformity
o Ensures uniform interpretation of key concepts across various jurisdictions in
India.
3. Flexibility for States
o Allows states to adapt the Act’s provisions and stamp duty rates to their specific
requirements.

Chapter-II: Stamp Duties (Sections 3-10)

Chapter-II forms the backbone of the Indian Stamp Act, as it governs the imposition, assessment,
and collection of stamp duties. It lays down the principles and methods for ensuring proper
stamping of instruments, which is vital for their legal enforceability and admissibility as
evidence.
Section 3: Instruments Chargeable with Duty
This section outlines the key principles for determining the chargeability of stamp duty on
various instruments.
1. Chargeability
• Instruments listed in Schedule I of the Act are subject to stamp duty.
• Duty is levied on instruments, not transactions.
2. Execution and Duty Payment
• The duty is payable at the time of execution of the instrument.
• For instruments executed outside India, the duty must be paid within three months of
their first use in India.
3. Types of Instruments Chargeable
• Transfer Instruments: Sale deeds, conveyances, gift deeds.
• Financial Instruments: Bonds, promissory notes, mortgages.
• Agreements: Partnership agreements, lease agreements, hire-purchase agreements.
• Insurance Policies: Life, general, or marine insurance policies.
• Miscellaneous: Powers of attorney, affidavits, and settlements.
4. Exemptions
• Instruments executed by the Central Government, State Government, or local
authorities.
• Certain instruments related to public welfare, charitable institutions, and religious trusts.

Section 4: Several Instruments for a Single Transaction

• When a transaction involves multiple instruments, only the principal instrument is
chargeable with full duty.
• Additional instruments are liable to a nominal duty as prescribed.
Example
In a property sale transaction documented through a sale deed and an agreement for sale:
• The sale deed is the principal instrument and must bear full duty.
• The agreement for sale is charged a nominal duty.

Section 5: Instruments Relating to Distinct Matters

• When a single instrument contains multiple distinct matters, stamp duty is payable on
the combined value of all matters.
Example
A deed transferring ownership of a house and a car will be chargeable for the combined stamp
duty applicable to the house and the car.
Section 6: Instruments Under Multiple Descriptions
 • If an instrument fits more than one description in Schedule I, the higher of the two duties
applies.
Example
An agreement that serves as both a mortgage deed and a lease agreement will attract the higher
of the two applicable duties.

Section 7: Policies of Insurance

This section specifies how stamp duty applies to insurance policies.
1. Classes of Policies
• Life Insurance: Duty is levied based on the sum insured and term.
• General Insurance: Includes fire, marine, and other non-life insurances, typically
subject to a fixed duty.
2. Exemptions
• Life insurance policies for small amounts.
• Policies issued by government insurance schemes, like the Pradhan Mantri Jeevan
Jyoti Bima Yojana.

Section 8: Bonds and Government Securities

• Government bonds and securities are subject to stamp duty, with specific exemptions for
instruments issued in the public interest.
Examples
• Bonds issued by local authorities for development projects.
• Securities issued by the Central Government under financial schemes like National
Savings Certificates (NSC).

Section 9: Power to Reduce or Remit Duties

The Central or State Governments are empowered to:
1. Reduce or remit stamp duty on certain instruments.
2. Provide exemptions for specific classes of transactions or entities, such as:
o Educational or charitable institutions.
o Cooperative societies.
o Transactions promoting economic development or public welfare.

Section 10: Mode of Payment of Duty

This section specifies how stamp duty is to be paid.
1. Methods of Stamping
• Impressed Stamps: Engraved or embossed stamps supplied by the government.
• Adhesive Stamps: Stamps that are affixed to the instrument and canceled by the user.
• E-Stamping: Introduced in recent years, it involves digital payment and online validation
of stamp duty.
2. Rules for Validity
• Stamps must be purchased in the name of one of the parties to the instrument.
• Instruments must bear the stamp before or at the time of execution.
3. Cancellation of Stamps
• Once used, adhesive stamps must be canceled to prevent reuse.
• Cancellation can be done by the executing party by writing or marking across the stamp.

State-Specific Variations
While Chapter-II provides a uniform framework, states have the power to modify:
• Rates of stamp duty based on local economic conditions.
• Exemptions for specific transactions or entities.
Example of State Variations
• Maharashtra imposes high stamp duty on property transactions but offers concessions
for women buyers.
• Karnataka promotes e-stamping for efficiency.

Key Concepts Explained

1. Instruments vs. Transactions
o Stamp duty applies to instruments (physical or digital documents) and not
directly to the underlying transaction.
2. Market Value Assessment
o For property-related instruments, the market value is determined to calculate duty.
o The government has guidelines for valuation to prevent under-reporting.
3. Penalty for Non-Compliance
o Unstamped or insufficiently stamped documents are inadmissible in court until
the deficiency is rectified with penalties.

Practical Implications of Chapter-II

1. Property Transactions
 o Ensures transparency and proper valuation in real estate.
2. Legal Enforceability
o Protects parties by making the documentation mandatory and valid.
3. Revenue Generation
o A significant source of government revenue, especially from high-value
transactions like real estate and corporate deals.

Chapter-VI: Reference and Revision (Sections 56-59)

Chapter-VI of the Indian Stamp Act, 1899, provides a framework for resolving disputes related
to the assessment and payment of stamp duty. It outlines procedures for referring cases to higher
authorities and revising decisions by the Collector or other officials.

Section 56: Control of, and Statement of Case to, the Chief Controlling Revenue Authority
This section governs the referral of cases to the Chief Controlling Revenue Authority (CCRA)
for clarification or guidance.
Key Provisions
1. Collector's Role
o If there is doubt about the chargeability of an instrument or the correct amount of
stamp duty, the Collector may refer the case to the CCRA.
2. Parties' Right to Request a Referral
o A person liable to pay duty or a person aggrieved by the Collector's decision can
request the case to be referred to the CCRA.
o This request must be made in writing.
3. Decision by the CCRA
o The CCRA provides a binding decision on the matter.
o It clarifies ambiguities related to the applicability of stamp duty or the
classification of instruments.
4. Binding Nature
o The decision of the CCRA is final unless revised under Section 57 or challenged
in court.

Section 57: Statement of Case by Chief Controlling Revenue Authority to High Court
This section deals with escalating disputes to the High Court when the matter involves a
significant question of law.
Key Provisions
1. Referral to the High Court
 o If the CCRA believes a substantial question of law is involved, it can refer the
matter to the High Court.
o Such referrals are generally made to seek clarification on complex legal
interpretations.
2. Procedure
o The CCRA drafts a statement of the case, detailing the legal and factual issues for
the High Court’s consideration.
o This statement is forwarded to the High Court.
3. Role of the High Court
o The High Court examines the legal questions raised.
o Its decision is binding on the CCRA, the Collector, and the parties involved.
4. No Further Reference to CCRA
o After the High Court's ruling, the CCRA cannot review the same matter again.

Section 58: Revision of Certain Decisions by the Collector

This section empowers the Collector to revise their earlier decisions regarding stamp duty
assessments.
Key Provisions
1. Conditions for Revision
o The Collector may revise a decision if new evidence is presented, or an error in
the original assessment is identified.
2. Limits on Revision
o Revision cannot result in injustice or violate principles of natural justice.
o The Collector must provide an opportunity to the affected parties to present their
case before revising any decision.
3. Scope of Revision
o Applies to decisions on:
▪ Classification of instruments.
▪ Amount of duty payable.
▪ Applicability of exemptions.

Section 59: Power of High Court to Call for Further Details

This section empowers the High Court to seek additional information or evidence in cases
referred to it under Section 57.
Key Provisions
 1. Scope of Power
o The High Court can demand further details or supporting documents to clarify the
matter.
2. Judicial Oversight
o Ensures that decisions are based on a comprehensive understanding of the facts
and law.
3. Binding Decisions
o After obtaining additional information, the High Court’s final ruling is binding
on all parties involved.

Key Features of Chapter-VI

1. Hierarchy of Authorities
o Establishes a clear chain of escalation:
▪ Collector → Chief Controlling Revenue Authority → High Court.
2. Transparency and Accountability
o Ensures disputes are resolved systematically and fairly.
o Provides checks and balances to prevent arbitrary decisions by lower authorities.
3. Judicial Involvement
o Allows significant legal questions to be resolved by the judiciary, ensuring
adherence to the rule of law.
4. Balance of Power
o Balances administrative and judicial powers, ensuring both are used appropriately
for dispute resolution.

Practical Implications
1. Dispute Resolution
o Helps individuals and entities contest incorrect or excessive stamp duty
assessments.
2. Legal Clarity
o Resolves ambiguities in interpreting the provisions of the Act or classifying
instruments.
3. Revenue Accountability
o Ensures that the government collects the correct amount of stamp duty without
overburdening citizens.
 The Indian Stamp Act, 1899

Chapter-I: Preliminary
➢ What is the primary objective of the Indian Stamp Act, 1899? - To collect revenue
through stamp duties
➢ In the Indian Stamp Act, 1899, an 'instrument' is defined as a document that: - Records a
legal or financial obligation
➢ Which of the following is not included in the definition of 'instrument' under the Act?
A. Deed of mortgage B. A promissory note
C. A will D. A lease deed
➢ The term 'Stamp' under the Indian Stamp Act, 1899, includes: - Both impressed and
adhesive stamps
➢ The Indian Stamp Act, 1899, extends to: -The whole of India

Chapter-II: Stamp Duties

➢ Under Section 3, stamp duty is levied on: - Instruments only
➢ What happens if an instrument is executed outside India but is brought to India for use? -
Duty must be paid within three months
➢ If a single instrument relates to multiple distinct matters, the duty is payable: - Separately
for each distinct matter
➢ Which instrument is chargeable with full duty when several instruments are executed for a
single transaction? - The principal instrument
➢ What happens when an instrument falls under multiple descriptions in Schedule I? - The
higher duty is applicable
➢ The Central or State Government has the power to remit or reduce stamp duties under: -
Section 9
What type of stamp is used under the Indian Stamp Act?
A. Impressed stamps B. Adhesive stamps
C. E-stamps D. All of the above
➢ Instruments executed by the Central or State Government are: - Exempt from stamp duty
➢ Which section of the Act deals with the mode of payment of stamp duty? - Section 10
➢ Policies of insurance are covered under which section of Chapter-II? - Section 7
What is the primary purpose of stamp duty?
A. To generate government revenue B. To validate transactions only
C. To prevent fraudulent practices D. Both A and C
➢ Unstamped instruments - are inadmissible until duty and penalty are paid.
 Chapter - VI: Reference and Revision
➢ What is the primary role of the Chief Controlling Revenue Authority (CCRA) under Chapter
- VI? - To hear disputes and provide binding decisions on stamp duty matters
➢ Under Section 56, who can request the Collector to refer a case to the Chief Controlling
Revenue Authority? - Either the Collector or the aggrieved party
➢ Which of the following is true about the decision of the Chief Controlling Revenue Authority
under Section 56? - It is binding unless revised by the High Court.
➢ Section 57 empowers the Chief Controlling Revenue Authority to refer cases to: - The High
Court
➢ What type of questions can the Chief Controlling Revenue Authority refer to the High Court
under Section 57? - Substantial questions of law
➢ What is the High Court required to consider when a case is referred to it under Section 57?
- The legality and interpretation of the law
➢ Under Section 58, the Collector can revise their decisions: - Only if new evidence is
presented or an error is found
➢ Before revising a decision under Section 58, the Collector must: - Provide an opportunity to
the affected parties to present their case
➢ Which section empowers the High Court to call for additional evidence in cases referred
under Chapter - VI? - Section 59
➢ What happens after the High Court makes a decision on a referred case? - The decision is
binding on all parties, including the Collector and the CCRA.
➢ Which authority is responsible for drafting the statement of the case when referring it to the
High Court under Section 57? - The Chief Controlling Revenue Authority
➢ What is the purpose of the High Court seeking additional information under Section 59? -
To clarify factual or legal ambiguities in the case
➢ What is the time frame for referring cases from the Collector to the Chief Controlling
Revenue Authority? - No specific time frame is provided in the Act.
➢ If an aggrieved person is dissatisfied with the CCRA’s decision, they can: - Directly
approach the High Court under Section 57.
➢ What is the overarching purpose of Chapter - VI of the Indian Stamp Act? - To provide a
mechanism for resolving disputes regarding stamp duty.