Paying stamp duty is an essential part of almost any transaction you do in India
, from buying or selling a house to setting up a business agreement or even registering your many insurance policies.
However, the process involves too many people and requires a tiring attention to detail that can discourage even the most optimistic people. So, we give you some of the basics of getting your documents 'stamped' to make it easier.
Of course, approaching a lawyer would be the best idea, and worth the money, if you wish to ensure that there will be no complications in the future.WHY WE NEED STAMP PAPER
Sandeep Jain, founder of Delhibased legal firm Lex Corpss, says the law requires you to pay stamp duty to the central or state government when certain transactions take place, such as buying, selling or leasing property, business agreements, making deeds, etc., that has a financial aspect to it.
This payment is done through the purchase of stamp paper and is proof that the government has been paid its share, for future reference.
The process may seem simple enough, but it begins to get complicated when figuring out jurisdiction, meaning who decides how much duty is to be paid. Depending upon the nature of the transaction, the central or state government will set stamp duty.
Kshatrshal Raj, an advocate with Parekh & Company, says the charges and requirements on stamp duty will also differ among the states and, so will the rules. "The states that do not have a Stamp Act will be governed by the Indian Stamp Act, which is a central act." Therefore, as we said earlier, it is always best to consult your lawyer.
There are three ways to pay stamp duty: (1) Using the e-stamping facility (2) Using papers bearing impressed stamps (non-judicial stamp paper), and (3) Using a franking machine.
However, not all states have all three options available. If all methods are available, all are recognised legally and the choice is with the individual(s) concerned. In fact, the technology-savvy would find electronic-stamping the most convenient and the simplest option.E-STAMPING
The Indian government introduced e-stamping to tackle counterfeiting and make the payment of stamp duty easier and glitch free. In fact, in certain states, such as Delhi, all stamp duty needs to be paid through e-stamping.
The central government has appointed the Stock Holding Corporation of India Limited (SHCIL) as the Central Record Keeping Agency (CRA) for all e-stamps used in the country.
Currently, SHCIL is responsible for everything-from user registration to administration, all e-stamping applications and maintenance of records. SHCIL has also designated authorised collection centres, or ACCs-scheduled banks-that will issue certificates to users.
The process is simple. First, you will have to go to the SHCIL website, www.shcilestamp.com, and check if your state government allows e-stamping. The site also has information on which transactions require stamping and addresses of collection centres.
If the option is available in your state, you will have to fill an application form at an ACC. The application form should have details of the parties involved and the transaction for which it is to be used.
This form is to be submitted along with payment for the stamp certificate. You can pay in currency or use a cheque or demand draft if it is done at the ACC. Online payment can be made using debit cards, credit cards, pay orders, RTGS, NEFT or through an account-to-account transfer.
The benefits of using e-stamps are many. It can be generated within minutes and is tamper-proof and all data is saved by SHCIL. In addition, an e-stamp's authenticity can be verified online using the enquiry module on the website as each e-stamp generates a unique identification number.
This does not mean there is no flaw in the system. The major flaw is that if the e-stamp certificate is misplaced, a duplicate copy cannot be issued. Also, if you wish to cancel the request for an e-stamp for a refund, it can be done only at SHCIL offices and not at the ACC that issued the certificate.
E-STAMPING ALTERNATIVE IN MAHARASHTRA
Electronic-stamping is not available in Maharashtra as the licence for SHCIL was not renewed by the state. Hence, since July 2013, the government has provided an alternative. You can pay stamp duty online via an electronic secured bank treasury receipt (eSBTR)-an online payment service. It is not an option in any other state.
You can log onto the website of the authorised bank, currently IDBI Bank, click the link for payment of stamp duty/registration fees. Enter the details and pay the duty through your Internet banking account.
You can get the eSBTR on giving a printout of proof of payment online at nominated branches of the bank. The eSBTR is a receipt of duty paid to the government. It is printed on secure stationery issued by banks.
NON-JUDICIAL STAMP PAPER
The most common way to pay stamp duty is by purchasing nonjudicial stamp paper from a licensed vendor.
Then, either the details of the transaction is written on the paper or a blank stamp paper is affixed to the agreement documents and signed by the executants, indicating that the stamp paper is an integral part of the documentation.
There are many disadvantages to using physical stamp paper. For instance, it can be purchased only from a licensed vendor and vendors, often, do not keep stamp papers of extremely low value (less than Rs 100) or of extremely high value (over Rs 750).
Therefore, for the ease of getting things done, people often resort to buying stamp paper from an unlicensed vendor at the risk of purchasing counterfeit papers. If the stamp duty payable is a large denomination, you will have to buy a number of papers to meet the requirement, making the process even more cumbersome.
To get a refund for an unused stamp paper, you must file a claim within six months from the date of purchase of the stamp paper.FRANKING
If you are to use franking, you have to submit an application at an authorised bank or a franking agency. The document for which stamp duty is to be paid is printed on plain paper (before the parties sign it) and a stamp is affixed on the paper indicating the value of the stamp duty paid.
The major benefit is that it is quick, especially if payment is made in cash or using a demand draft.
The primary drawback is that franking machines are not available at all bank branches. In addition, there are no uniform rules for authorised franking agencies. This could result in difference in rules among states and even among banks within a state.
Also, each bank has a franking quota. This means that if the denomination you need is higher than the bank's quota, the bank should be informed sufficiently early to conclude the transaction.
Finally, do remember that in certain states, such as in Maharashtra, all stamps, however purchased, will be rendered invalid if not used within six months from the date of purchase.
The key to surviving this process is to be very thorough.