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Mode of payment of stamp duty on transfer of shares

(Guest)

Hi,

Share transfer form (Form 7B) should bear stamp duty which is 25 Paise for every one hundred rupees of the value of shares or part thereof in case of transfer of shares. My query is :

What are the modes of payment of stamp duty on transfer of shares?

1. Is it only by way of purchase and affixing share transfer stamps on the form 7B

2. OR else we can get franking also done from bank

3. OR else can pay consolidated duty online/offline.

What is the most followed practice for payment of stamp duty on transfer of shares since the amount involved in one of my case is very handsome. Pls advice.

Thanks.

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41 Replies

NIRAJ GOEL (PROP.) (107 Points)
Replied 27 April 2012

the normal practice is to paste share transfer stamps on share transfer form.

(Guest)

Agreed, but amount of stamps involved is in lacs so I am reluctant to paste adhesive stamps. Thanks.

NIRAJ GOEL (PROP.) (107 Points)
Replied 27 April 2012

dear neha you can attach some blank papers and then paste and cancel.

actually i have not seen anyone to pay duty on transfer in treasury. you need to contact the concerned stamp department. kindly update the same over this portal

check one more issue, whether there is consideration over this transfer or not

(Guest)

Dear Neeraj Yes, transfer involves consideration.

Ajay Mishra (Company Secretary) (74332 Points)
Replied 27 April 2012

Hi

Section 108 provides that a company shall not register a transfer of shares of, the company, unless a proper transfer deed in Form 7B as given in the Companies (Central Government's) General Rules and Forms, 1956 duly stamped and executed by or on behalf of the transferor and by or on behalf of the transferee and specifying the name, address and occupation, if any, of the transferee, has been delivered to the company, alongwith the certificate relating to the shares, or if no such certificate is in existence, alongwith the letter of allotment of the shares.

Section 108 requires that where share transfer form is delivered to the Board it should be duly stamped. It means stamp of adequate value should be affixed and cancelled on transfer deed. Unless a transfer form is duly stamped when it was delivered to the Board of directors for registration of transfer, it could not be said that the mandatory requirement of section 108 is complied with and the company is justified to refuse the transfer. [Patel Engineering Co. v B.Y. Invest. Pvt. Ltd. & Others Case No. 20/CLB/WR/91]

In general practice, we follow, tomention the amount of stamp duty on face of transfer deed and then affix the share transfer stamp on the back of deed. if the amount of stamp deed is not covered in space of form, then you can add additional papers and paste the same share transfer stamp and cancelled the same. It is not necessary that stamps be affixed before transfer deed is executed, they are to be affixed before delivery. [Prafulla Kumar Rout v Orient Engg. Works (P) Ltd. (1986) 60 Comp Cas 65 (Ori)]. You mention on share transfer deed where the normal share transfer stamp is affixed that"SHARE TRANSFER STAMPS AFFIXED ON ADDITIONAL SHEETS".

We follow the same in our company, we also pay 4.50 lac stamp duty on the basis of this practice.

Regards

Other views are also solicited.

1 Like

(Guest)

Originally posted by : Ajay Mishra
	Hi Section 108 provides that a company shall not register a transfer of shares of, the company, unless a proper transfer deed in Form 7B as given in the Companies (Central Government's) General Rules and Forms, 1956 duly stamped and executed by or on behalf of the transferor and by or on behalf of the transferee and specifying the name, address and occupation, if any, of the transferee, has been delivered to the company, alongwith the certificate relating to the shares, or if no such certificate is in existence, alongwith the letter of allotment of the shares. Section 108 requires that where share transfer form is delivered to the Board it should be duly stamped. It means stamp of adequate value should be affixed and cancelled on transfer deed. Unless a transfer form is duly stamped when it was delivered to the Board of directors for registration of transfer, it could not be said that the mandatory requirement of section 108 is complied with and the company is justified to refuse the transfer. [Patel Engineering Co. v B.Y. Invest. Pvt. Ltd. & Others Case No. 20/CLB/WR/91] In general practice, we follow, tomention the amount of stamp duty on face of transfer deed and then affix the share transfer stamp on the back of deed. if the amount of stamp deed is not covered in space of form, then you can add additional papers and paste the same share transfer stamp and cancelled the same. It is not necessary that stamps be affixed before transfer deed is executed, they are to be affixed before delivery. [Prafulla Kumar Rout v Orient Engg. Works (P) Ltd. (1986) 60 Comp Cas 65 (Ori)]. You mention on share transfer deed where the normal share transfer stamp is affixed that"SHARE TRANSFER STAMPS AFFIXED ON ADDITIONAL SHEETS". We follow the same in our company, we also pay 4.50 lac stamp duty on the basis of this practice. Regards Other views are also solicited.

Agree Ajay Jee,

This is the right practice which we all are following. But I just wanted to confirm whether this is the only way to pay stamp duty or else franking on share transfer form/ consolidated payment of duty is possible since that is far more relaxing, genuine and credible.

Thanks

Ajay Mishra (Company Secretary) (74332 Points)
Replied 27 April 2012

Hi

In India, for share transfer, share transfer stamp are used for properly execution of transfer deed. It does not talk about consolidated payment of duty because party are single( Transferor and transferee).

Consolidated stamp duty requires for company, where more than one share certificates are to be franked, stamped.

In case of share transfer, it is not possible and when you go for the same to SDM office/Revenue office for the same, they will demand you to affixed share transfer stamp.

Regards

(Guest)

Ajay Jee,

Here by using the word consolidated, i mean in case i have to pay Rs. 2.00 lacs is duty for one single share transfer deed then i have to purchase 2.00 Lacs revenue tickets and affix them on seperate sheets. So i wish in case franking is possible then I can be relaxed with the tedious task of affixing 2.00 lacs stamps and can very well get it done in couple of minutes by way of franking.

I hope now i am able to portray my query in legible manner to you.

Looking to hear from you.

Thanks

Ajay Mishra (Company Secretary) (74332 Points)
Replied 27 April 2012

Hi

If , it will be possible then it will be very helpfull for company also.

1 Like

(Guest)

Yaa, since company has to preserve those bulky transfer deeds with supporting attached sheets evidencing payment of adequate stamp duty.

Ajay Mishra (Company Secretary) (74332 Points)
Replied 27 April 2012

Yes....because it cover under the meaning "transfer deed properly executed" which require the company to have the same in record.

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 27 April 2012

Yar AM nahi pata to chod na....like me..

The query is about franking and consolidated payments and not about not about simple payment via share transfer deed...

Cheers !!!

SkDash (CS (Member) CWA (Final)) (909 Points)
Replied 28 April 2012

Hello All

it is very much possible and we are following the practice pf paying share transfer duty by franking. In Karnataka, physical stamp is banned and i dont think this will be a violation in case you pay by franking. Anyway it is going to State Govt revenue

Manoj Kumar Yadav (CS) (21 Points)
Replied 30 April 2012

Hi,

PAYMENT OF STAMP DUTY BY GETTING THE INSTRUMENT FRANKED BY THE BANK AUTHORIZED FOR THIS PURPOSE IS ALSO POSSIBLE IRRESPECTIVE OF THE AMOUNT OF STAMP DUTY AND WHETHER THE INSTRUMENT IS SHARE TRANSFER FORM OR SHARE CERTIFICATE.

REGARDS

CS MANOJ YADAV