Roc stamp duty paid

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bhavik mehta (Querist)
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06 February 2014 Dear All,

My company has increased its share capital and accordingly paid stamp duty as per the rules of Rs. 20,00,000/-.

I have doubt about its treatment of accounting and also whether it should be expense off or should be proportionately expenses off over the period??

& also guide accounting treatment if Foreign Exchange Gain occured in share application money received from NRI .

Please guide.

Thanks

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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07 February 2014 For accounting purpose it should be w/off in the year of occurrence itself. But for taxation ,disallow being not a revenue expenditure (225 ITR 792). However, there is a case law (The Federal bank ltd) allowing it as revenue expense for the purpose of taxation.

bhavik mehta

bhavik mehta (Querist)
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10 February 2014 Thank you sir,

Can you also guide about the foreign exchange gain occurance if any , in case of Share application money received from NRI??

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)
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22 July 2025 Sure! Here’s a clear guide for both your queries:

1. Accounting treatment of Stamp Duty paid on Share Capital Increase:
Accounting:
Stamp duty paid on increase in share capital is generally treated as a capital expenditure. It should be charged to the Profit & Loss account in the year of payment (written off in the year of occurrence).
It is not amortized over the years.

Taxation:
For tax purposes, it is generally considered capital expenditure and not deductible as a revenue expense. However, there are some case laws (like The Federal Bank Ltd.) where courts allowed it as a deductible expense, but this depends on facts and jurisdiction.

2. Foreign Exchange Gain on Share Application Money received from NRI:
When you receive share application money from NRI in foreign currency, any foreign exchange gain or loss arising due to fluctuation in exchange rates before allotment (i.e., while the amount is in the form of share application money) is considered capital in nature and treated as capital reserve on allotment of shares.

If the shares are not allotted, any forex gain/loss will be treated as a capital gain or loss for tax purposes, not as revenue.

After the shares are allotted, any exchange differences on the amount are not considered income or expense.

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