19 October 2016
Whether stamp Duty on share certificate is affixed based on the rate applicable at the place, where the registered off. of the company is situated or at the place where the board held its meeting to approve issue of the share-certificate?
20 October 2016
Dear Sir, 1) The levy and payment of stamp duty on issue of share certificates is governed by the provisions of Stamp Act as applicable to the respective state. As per Section 3 of Indian Stamps Act 1899, Every Share Certificate must bear the necessary stamp duty as per the Stamp Act of the respective State/ Union Territory from which Certificate is issued. The rates of stamp duty can be obtained with reference to relevant article of given State Act. The Company is required to pay the stamp duty within 30 days from the date of issuance of certificate. 2) However, the Companies Act, 2013 does not specifically says that stamp duty shall be paid as per the rate of the State where the registered office of the Company is situated. This view is taken as Collector of Stamps, Delhi, has held in one of the cases that it is the place of registered office of a Company where stamp duty has to be levied because a share certificate is executed only at the registered office where statutory formalities – entering the name of share holder in register and issue of valid certificate can be completed for following two reasons:– 1. Register of member is kept only at the registered office; 2. No share certificate is complete or valid without affixation of common seal that is kept only at the registered office.
21 October 2016
Section 3 of the Stamp Act,1899 does not contain the provision as stated above. It only stipulates that stamp duty is to be paid on execution of an instrument. The levy and payment of stamp duty on issue of share certificates is governed by the provisions of Stamp Act as applicable to the respective state, where the instrument is executed, since the subject falls within the State List of the Constitution of India. Stamp duty shall be payable as per the rate applicable to the state, where the registered office of the Company is situated because share certificates are issued from there.
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