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Stamp Duty On Transfer

Dikshay Chandaliya (53 Points)

05 February 2025

I WANTED TO UNDERSTAND WHAT WILL BE THE STAMP DUTY IMPLICATION IN CASE OF TRASNFER OF IMMOVABLE PROPERTY BY A PARTNER TO HIS PARTNERSHIP FIRM AS HIS CAPITAL CONTRIBUTION

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Rama chary Rachakonda (Master in Accounts & high court Advocate) (8392 Points)
Replied 05 February 2025

A great question on stamp duty implications!

When a partner transfers immovable property to their partnership firm as capital contribution, stamp duty implications arise.

Here's a breakdown: Stamp Duty Implications 1. *Transfer of property*: When a partner transfers immovable property to the partnership firm, it is considered a transfer of property.

2. *Stamp duty applicability*: Stamp duty is applicable on the transfer of immovable property, as per the Indian Stamp Act, 1899, and relevant state-specific stamp duty laws.

3. *Exemption*: However, there is an exemption from stamp duty when a partner transfers property to the partnership firm as capital contribution, subject to certain conditions. Conditions for Exemption To avail the exemption, the following conditions must be met:

1. *Transfer as capital contribution*: The transfer of property must be made as a capital contribution to the partnership firm.

2. *Partnership deed*: The partnership deed must provide for the transfer of property as capital contribution.

3. *No consideration*: The transfer must be made without any consideration, i.e., the partner must not receive any payment or benefit from the firm in exchange for the transfer.

Relevant Provisions The following provisions support the exemption:

1. *Section 45 of the Indian Stamp Act, 1899*: Exempts transfer of property as capital contribution to a partnership firm from stamp duty.

2. *Section 24 of the Partnership Act, 1932*: Allows partners to contribute capital to the firm, including transfer of property.

Conclusion In summary, when a partner transfers immovable property to their partnership firm as capital contribution, stamp duty implications arise.

However, if the conditions mentioned above are met, the transfer may be exempt from stamp duty. It's essential to consult with a qualified legal or tax professional to ensure compliance with relevant laws and regulations.

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