calculation of stampduty for the demerger company

States of Maharashtra, Gujarat, Rajasthan, Karnataka and Kerala have their separate stamp duty legislations including schedules for rates. As per the Stamp Acts of Maharashtra, Gujarat, Rajasthan and Karnataka, an order of the High Court under section 394 of the Companies Act in respect of amalgamation or reconstruction of companies is regarded as "conveyance" and is chargeable to stamp duty at the rates specified in the Acts.

Rates for Maharashtra

The rates for stamp duty applicable to order of the High Court under section 394 of the Companies Act for the State of Maharashtra is given in Schedule 1 to the Bombay Stamp Act, 1958 under Article 25(2)(da) relating to Conveyance:

(da) High Court order under section 394 of the Companies Act, in respect of amalgamation or reconstruction of companies 10% of market value of shares allotted in exchange and consideration if any paid but not exceeding the higher of:
  

                                                        i.            5% of Market Value of the immovable property in Maharashtra or

                                                       ii.            0.7% of Market Value of shares allotted in exchange and consideration if any paid

The market value of shares of transferee company will be the value of shares on stock exchange on the "appointed day" mentioned in the scheme or where the appointed day is not so fixed the date of the court’s order. In case where shares of transferee company are not listed or not quoted, the market value of shares means market value of shares issued or allotted with reference to the market value of shares of the transferor company or the value determined by the Collector.

In respect of states other than those mentioned above, the Indian Stamp Act is adopted with certain amendments. The Indian Stamp Act, 1899 and the Kerala Stamp Act does not include order of the High Court under Section 394 of the Companies Act as "conveyance". The duty payable on an order of the High Court under Section 394 of the Companies Act in respect of amalgamation or reconstruction of companies in such states is not free from doubt.

High Court of Calcutta in the case of Madhu Intra Ltd. vs. Registrar of Companies [(2005) 58 SCL 160 (CAL.)] recently held that transfer of assets and liabilities from transferor company to transferee company effected by order under Section 394(1) of Companies Act is purely by operation of law and, therefore, stands outside the provisions relating to transfer under the Transfer of Property Act, 1882 and no stamp duty is leviable on the same. However in practice the stamp duty authorities may adopt the view that both movable property and immovable property are being conveyed under the order and therefore seek to levy stamp duty on the market value of the movable and immovable properties at the corresponding rates.