Table of ContentsHistory of Stamp DutyStamp Act and Immovable PropertyPosition under the Indian Stamp ActConclusionHistory of Stamp DutyIn any negotiated transaction, one A key element that forms part of the negotiations is who would pay the government taxes for the transaction, and this is particularly true for transactions involving real estate in which stamp duty constitutes a substantial component of the total consideration. If we want to define stamp duty, it can be defined as a tax levied on legal documents relating to transactions such as transfer of property. Say no to plagiarism. Get a tailor-made essay on “Why Violent Video Games Should Not Be Banned”? Get the original essayStamp duty, in the form of the tax we see in the modern world, originated in Spain in the early 1600s. From there it spread to countries like Denmark, l England, France, Prussia and the Netherlands over the next century and gradually spread to the rest of the world through imperial routes of colonization and trade. A good example of this is the introduction of the Stamp Duty in America, when the British Parliament passed the Stamp Act in 1765. This tax was imposed on all forms of printed paper, from newspapers to licenses and all other forms of legal documents. At that time, the revenue generated by the imposition of this stamp duty was used to finance British troops positioned in America. Along with this, the revenue collected was also used to pay the salaries of British civil servants stationed in America in administrative capacities. Over time, various specialized laws have evolved, each providing a comprehensive and exhaustive set of rules regarding the transaction. regulates from the outset of the agreement how disputes are to be resolved, if and when they arise. In such a specialized legislative environment, the applicability of universal general concepts, such as stamp duty, has become slightly archaic and limited in its application. However, given the importance of these rules, they are still preserved in certain transactions, and transactions involving the transfer of real estate are a prime example. When approaching the concept of issues such as stamp duty, the first question one asks is: what is the rationale for imposing and, more importantly, paying stamp duty. If we look at the transactions on which this fee is levied, we can see that most of these transactions take place between two private parties, in which there is some form of transfer of title, temporary or permanent, from one party to the 'other. another, which may include the transfer or retention of physical possession and easements that accompany the property. So, the question arises, when the two parties regulated by the law enter into a transaction and any gain made by either party through that transaction would be taxed separately, why are individuals forced to pay additional fees? tax only to effect the transaction that would result in the transfer of title from one party to another. The answer to this question can also be found in history books. If we look at the history of tax regimes that have evolved around the world, we see that when the concept of stamp duty was created and applied, the tax regimes in most jurisdictions were very primitive and very limited. Moreover, at the beginningAs early as the 1600s, the concept of "tax" was still seen as something that was paid by the common man to the state, and also to the Church in some cases. It was an oppressive technique of depriving ordinary people of their money in the name of the state, while clergy and nobles got away scot-free. A system was therefore needed that would be universally applicable based on the transaction and not based on the parties involved in the transaction. Additionally, this was also the time when most European colonizers were beginning to massacre the world with centuries of warfare and therefore needed additional income to maintain their fleets. Additionally, the tax systems of the time were not as sophisticated as today and therefore a universal concept of stamp duty was created, which would act as a form of tax on any type of transaction that would be concluded by two parties. If we look at the history of stamp duty in India, we have to look at the Indian Stamp Act of 1899 which was passed by the British Parliament when India was still a colony. The provisions of this law were quite comprehensive and encompassed all kinds of transactions that could be entered into and the forms of duties that could be imposed on those transactions. For example, this law contemplated the tax regime that would be implemented on transactions such as insurance, particularly marine insurance, as ships were used as the primary means of transportation in intercontinental trade. Further, this Act also provided regimes for transactions involving debentures and securities as well as transactions involving transfer of immovable property. Even though this law is over 100 years old, it is still applicable today. However, the law, over time, has evolved to facilitate the transactions taking place today. One of the main features of this measure is the introduction of stamped paper under the Stamp Act. Stamp paper is a document issued by the government that has a fixed value, and the value of the stamp paper would be assumed to be the stamp duty paid on the transaction executed on that stamp paper. Although there is central legislation in the form of the Indian Stamp Act, 1899, the point of imposition of stamp duty falls within the jurisdiction of the states and hence states are permitted to enact their own legislations specialized on this subject. In the state of Maharashtra, this takes the form of the Maharashtra Stamp Act. Originally passed as the Bombay Stamp Act in 1958, it repealed the applicability of the Indian Stamp Act in the jurisdiction falling under that Act. most often limited to operations involving the transfer of real estate. Chapter II of the Maharashtra Stamp Act mainly covers most of the provisions relating to imposition of stamp duty. While Part A of the Act (sections 3 to 9) deals with instruments on which such obligations might arise, Part B (sections 10 to 16) deals with stamps and the methods of using them. In Part A, the Act provides for a distinction between instruments that would be used in different types of transactions and the stamp duty that would be levied on each of them. Therein, Section 4 specifically provides for duties that would be imposed on multiple instruments used in a single transaction of development agreement, sale, lease, mortgage or settlement. Article 4: (1) Where, in the case of a development, sale, lease, mortgage or settlement agreement, more than one instrument is used to complete the transaction, the principal instrument alone shall be subject to the duty prescribed in the Schedule I for thetransfer, development agreement, lease, mortgage or settlement, and each of the other instruments shall be chargeable with a fee of one hundred rupees in lieu of the fee (if any) prescribed for this purpose in this Schedule. (2) The parties may determine for themselves which of the instruments so used shall, for the purposes of subsection (1), be deemed to be the principal instrument. (3) If the parties are unable to determine the principal instrument between themselves, the officer before whom the instrument is produced may, for the purposes of this section, determine the principal instrument, provided that the duty payable on the The effect thus determined will be the highest duty that would be payable for any of the said instruments used. As this section shows, there are several documents that are part of the transaction and each of these documents carries a separate obligation at the time of execution. The importance of stamp duty is that it provides legal backing and enforceability to a document. If we look at Annexure I, it provides a long list of types of documents used in property transfer transactions and the stamp duty applicable to them based on criteria such as the type and size of the property that is being transferred, the type of instrument and the value of the transaction itself. Returning to Part B of Chapter II, it provides for the type of stamps that can be used and the transactions in which each of these stamps finds its application. It also addresses the issue of paying stamp duty. While Section 10 provides a general overview of how payments are to be made, Section 10A contains special provisions for institutional organizations such as government agencies, banks and insurance companies, providing that payments Institutions falling under the article must only pay stamp duty in cash or in cash. form of demand drafts. Pat C of Chapter II, which extends from Section 17 to Section 19, provides for the time in a transaction when stamp duty must be paid for that particular transaction. In this, there is a distinction drawn between section 17 and section 18 depending on where the instrument is executed vis-à-vis. Section 17 provides for when stamp duty is to be paid when the instrument is executed in the State, while Section 18 provides for when stamp duty is to be paid when the instrument is executed in outside the state. Section 19 contains a special provision which provides for creation of a special class of instruments which would attract higher duty in the State of Maharashtra. Part D which extends from section 20 to 29 covers one of the most crucial aspects of this law, which is the assessment of the law that would be applicable on a transaction. While the early sections of this part deal with issues such as the conversion of foreign currency amounts (Article 20), the valuation of shares and marketable securities (Article 21) and the effect of the exchange rate status or the average price (article 22). ), the second half of the chapter deals with how the rights to the transaction should be assessed, whether it is an annuity (article 26) or how transfers in consideration of debts or subject to future payments, etc., must be acknowledged (article 25). Article 27 specifically provides for the manner of levying duties on instruments whose subject matter is indeterminable in the categorical matrix provided for in the law. Furthermore, Article 28 contains provisions on the facts to be stated in the instrument and which affect the rights that would be applied to them, while Article 29 provides guidelines as to rights in the case of certain means of transportation. Part E is the last.