Maharashtra Stamp Act

I. APPLICABILITY

The Maharashtra Stamp Act,1958 applies to the entire State of Maharashtra. Only the instruments specified in the Schedule I to the Act are covered by this Act. All other instruments are either chargeable under the Indian Stamp Act (e.g., transfer of shares) or are not chargeable at all (i.e., if they are not specified under the Act as well as under the Indian Stamp Act).

II. CHARGE OF STAMP DUTY

2.1 It is very important to note that stamp duty is on an instrument and not on a transaction.

2.2 S. 3 of the Act levies stamp duty at the rate provided in Schedule I on any instrument executed in the State. Even instruments executed outside the state are liable to duty only on their receipt in the State, provided it relates to a property situated in the State or a matter or thing to be done in the State.

2.3 An instrument covering or relating to several distinct matters is chargeable with the aggregate amount of duty with which each separate instrument would have been chargeable.

2.4 In case an instrument is so drafted that it is covered within the ambit of more than one Article under Schedule I, then it shall be taxed by that Article which levies the highest amount of stamp duty.

2.5 The term “Instrument” has been defined to include every document by which any right or liability is or purports to be created, transferred, limited, extended, extinguished or recorded.

However, it does not include a bill of exchange, cheque, promissory note, bill of lading, letter of credit, policy of insurance, transfer of share, debenture, proxy and receipt. Some instruments narrated are governed by Indian Stamp Act, 1999.

III. CERTAIN DEFINITIONS

3.1 “Conveyance” has been defined to include:

1. A conveyance on sale,
2. Every instrument,
3. Every decree or final order of any Civil Court,
4. Every order made by the High Court u/s. 394 of the Companies Act, 1956 in respect of amalgamation of companies; by which property, whether movable or immovable or any estate or interest in any property is transferred to, or vested in any other person inter vivos and which is not otherwise specifically provided for by Schedule I.

The Explanation to the definition provides that any instrument by which one co-owner transfers his property to another co-owner would be deemed to be a conveyance provided that it is not an instrument of partition.

3.2 “Instrument of gift” has been defined to include, in case of an oral gift any instrument recording its making or acceptance, whether by way of declaration or otherwise.

3.3 “Instrument of partition” means any instrument whereby co-owners of any property divide or agree to divide such property and includes:

1. Any final order for effecting a partition passed by any revenue authority or any civil court,
2. An award by an arbitration directing a partition, and
3. When any partition is effected without executing any such instrument, any instrument or instruments signed by the co-owners and recording, whether by way of declaration of such partition or otherwise, the terms of such partition amongst the co-owners.

The expression 'co-owners' includes all kinds of co-ownership such as joint tenancy, tenancy in common, coparcenary, membership of HUF, etc. and the partnership.

3.4 “Immovable Property” includes land, benefits to arise out of land and things attached to the earth or permanently fastened to anything attached to the earth. The two leading decisions on this definition are those of the Supreme Court in the case of Sirpur Paper Mills (1998) 1 SCC 400 and the case of Duncan’s Industries (2000) 1 SCC 633.

IV. PAYMENT OF STAMP DUTY

4.1 S.17 of the Act provides that all instruments chargeable with duty and executed in Maharashtra should be stamped before or at the time of execution or immediately thereafter or on the next working day following the date of execution.

4.2 Instrument executed only out of Maharashtra may be stamped within three months after it is first received in State.

4.3 Duty can be paid by way of adhesive or impressed stamps on the instruments. Adhesive Stamps affixed should be cancelled at the time of execution so that they are not available for reuse. Now franking of stamp duty is not permitted.

4.4 Further, S.14 prohibits writing of a second instrument chargeable with duty on a stamp paper on which an instrument chargeable with duty has already been written.

4.5 The stamp papers must be in the name of one of the parties to the transaction. They cannot be in the name of the relative, Chartered Accountant or Lawyer of the parties.

4.6 The date of issue of the stamp paper must not be more than 6 months older than the date of the transaction.

4.7 Who bears and pays the stamp duty is a matter of agreement between the parties. In the absence of any such agreement, the Act provides that in the case of a Conveyance, duty is to be paid by a buyer and by the lessee in case of a lease. In cases of Bonds, Release, Settlement, it is to be paid by the person making or drawing the instrument. In case of exchange, it is to be paid by the parties in equal shares and in case of partition, by the parties in proportion to their respective shares. In all other cases, it is to be paid by the person executing the instrument.

4.8 Stamp duty is payable at rates mentioned in Schedule I. Depending upon the Instrument, it may be based upon the market value, area, or various other criteria. In case of instruments which are based upon market value of the property, the term in relation to any property which is the subject matter of an instrument, means the price which such property would have fetched if sold in open market on date of execution of such instrument or consideration stated in the instrument whichever is higher.

The stamp office determines the market value of the property by referring to an Annual Statement of Rates (commonly known as Stamp Duty Ready Reckoner) which gave the Market Values of various immovable properties in Mumbai. The Reckoner divides the immovable property into various categories such as developed land, undeveloped land, residential units, industrial units/office, shops, etc., and fixes their market value accordingly.

4.9 Any person can apply to the Collector of Stamps for adjudication of the stamp duty payable on the instrument who shall determine the duty, if any with which the instrument shall be chargeable. It may be noted that now adjudication is compulsory in all cases where an instrument requires registration as the Registrar of Sub-Assurances insists upon the same. The instrument should be brought to the Collector within 1 month of execution of such instrument in the State and within 3 months from date of receipt of such instrument in the State. When registrar of sub-registrar assurance determine proper value, there is no need for adjudication.

V. UNDERSTAMPED DOCUMENT

5.1 Under S. 34 of the Act, any instrument which is inadequately /not stamped, then it shall be inadmissible in evidence for any purpose, e.g., in a Civil Court. Such instruments can be admissible in evidence on payment of the requisite amount of duty and a penalty @ 2% per month on the deficient amount of duty calculated from the date of execution. However, the maximum penalty cannot exceed four times the amount of duty involved.

5.2 Further, any public officer can impound such improperly stamped instruments if it comes to his notice. Such impounded instruments must be sent to the Collector who would then determine the amount of duty and penalty, if any, payable on the same. Any party to an instrument can also suo moto submit an instrument for adjudication by the Collector u/s. 31.

There is separate set of procedure for a jurisdiction.

5.3 A person can be punished with rigorous imprisonment for up to 6 months (not less than 1 month) and with fine up to 
₹ 5,000, if it is proved that the instrument was undervalued or short payment of duty was made with intention to evade duty.

SCHEDULE I RATES (IMPORTANT ARTICLES)

MAHARASHTRA

SOME IMPORTANT INSTRUMENTS UNDER INDIAN STAMP ACT