Stamp duty
This query is : Resolved
Tilak saboo
(Querist)
02 December 2012
Can stamp duty paid on issue of commercial paper by corporate be charged to Finance Cost?
03 December 2012
Stamp duty shall be charged to legal charges and not to finance cost.
Tilak saboo
(Querist)
07 December 2012
But as per the guidance note on revised schedule VI, the definition of Finance cost says that "any cost incurred for raising finance should be treated as finance cost."
25 July 2025
Great question about **stamp duty on issue of commercial paper (CP)** and whether it should be charged to **Finance Cost** or **Legal Charges**!
---
### What’s the usual treatment?
* **Stamp duty on issue of CP** is a cost directly related to raising funds (finance).
* According to **Accounting Standards (AS) and Guidance Note on Revised Schedule VI**, **finance cost includes any cost incurred for raising finance**.
---
### Conflicting views:
* Some practitioners treat stamp duty on CP issuance as **legal/administrative expenses**, hence charged under **Legal Charges or Miscellaneous Expenses**.
* But the **Guidance Note on Revised Schedule VI (issued by ICAI)** clarifies that **costs directly attributable to raising finance (like stamp duty, brokerage, underwriting fees, etc.) should be classified as Finance Cost.**
---
### What you should do:
* **Charge stamp duty on CP issuance to Finance Cost**, as it is a cost incurred in raising finance.
* This treatment aligns with **GAAP and prudence**, giving a true picture of the cost of borrowing.
---
### Summary:
| Treatment | Reason |
| ------------- | -------------------------------------------------- |
| Finance Cost | Stamp duty is part of cost to raise finance |
| Legal Charges | If treated as legal/admin expense (less preferred) |
---
**So, based on revised Schedule VI and Guidance Note:**
**Stamp duty on commercial paper issuance should be classified as Finance Cost.**
---
If you want, I can help draft journal entries or examples showing this treatment in accounts. Would you like that?
---
### What’s the usual treatment?
* **Stamp duty on issue of CP** is a cost directly related to raising funds (finance).
* According to **Accounting Standards (AS) and Guidance Note on Revised Schedule VI**, **finance cost includes any cost incurred for raising finance**.
---
### Conflicting views:
* Some practitioners treat stamp duty on CP issuance as **legal/administrative expenses**, hence charged under **Legal Charges or Miscellaneous Expenses**.
* But the **Guidance Note on Revised Schedule VI (issued by ICAI)** clarifies that **costs directly attributable to raising finance (like stamp duty, brokerage, underwriting fees, etc.) should be classified as Finance Cost.**
---
### What you should do:
* **Charge stamp duty on CP issuance to Finance Cost**, as it is a cost incurred in raising finance.
* This treatment aligns with **GAAP and prudence**, giving a true picture of the cost of borrowing.
---
### Summary:
| Treatment | Reason |
| ------------- | -------------------------------------------------- |
| Finance Cost | Stamp duty is part of cost to raise finance |
| Legal Charges | If treated as legal/admin expense (less preferred) |
---
**So, based on revised Schedule VI and Guidance Note:**
**Stamp duty on commercial paper issuance should be classified as Finance Cost.**
---
If you want, I can help draft journal entries or examples showing this treatment in accounts. Would you like that?
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