NOTE ON PAYMENT OF STAMP DUTY ON SHARE CERTIFICATES IN DELHI
Definitions:
- 2(26) “stamp” means any mark, seal or endorsement and includes an adhesive or impressed stamp for the purpose of duty chargeable under the act.
- 2(6) “Chargeable” means, as applied to an instrument executed or first executed after the commencement of this Act, chargeable under this Act, and, as applied to any other instrument, chargeable under the law in force in India when such instrument was executed or, where several persons executed the instrument at different times, first executed.
- 2(12) “Executed” and “execution“, used with reference to instruments, mean “signed” and “signature”.
- 2(14) “Instrument” includes every document by which any right or liability is, or purports to be, created, transferred, limited, extended, extinguished or record.
As per section 56 of the Companies Act, 2013 read with relevant rules made there under, the Share Certificate shall be issued:
- Within 2 months of the incorporation of company to the subscribers to the Memorandum of Association
- Within 2 months of the allotment of shares, in case of fresh allotment
- Within 1 month of the receipt of instrument of transfer/ transmission of shares
As per the Section 46 of Companies Act, 2013 read with relevant rules made there under, the Share certificate issued under the Common seal, if any, shall be signed by Two Directors or Director and Company secretary, if appointed, of the Company.
STAMP DUTY IN DELHI:
As per section 3 of the Indian Stamp Act, 1899 (hereinafter referred to as the Act) every instrument mentioned in the schedule is chargeable with the proper duty. The duty payable in accordance with section 10 of the Act by means of stamps indicated on the instrument.
Article 19 of the schedule – IA of the Indian Stamp Act, 1899 (as applicable to Delhi) governs payment of proper duty on the instruments evidencing the right or title of the holder thereof or any other person to any share or stock in any incorporated company or body corporate or to become proprietor of share or stock of any such company or body.
The proper stamp duty payable in all such instrument is Rs. 1/- for every Rs. 1000/- or part thereof of the value of the share or stocks including the amount of premium. The Company shall pay the stamp duty online within 30 days of issue of Share Certificate. If Not paid within 30 days, then proceed for offline procedure because late payment option in online mode currently is not available. (See Procedure below)
In case of non-payment of stamp duty or evasion of payment of stamp duty on the issue of share certificate in case of allotment of share, the company shall be liable for heavy penalty under the Act, which may extend to 10 times of the duty.
In case of duplicate / split share certificate, Stamp duty of Rs. 10/- shall be paid (As per Article 25 of the Schedule – 1A of the Indian Stamp Act, 1899 (as Applicable to Delhi), because the stamp duty has already been paid on the respective share certificates bearing distinctive number of shares.
The stamp duty must be paid where the registered office of the company is situated otherwise it shall lead to Loss of revenue of the State (As stamp duty on share certificate is state matter). In this regards, Collector of Stamp, NCT of Delhi has issued notice to companies to pay the stamp duty on the grounds that registered office of the Company is situated in Delhi and stamp duty shall be paid in NCT of Delhi only.
Link for Payment of Stamp duty Online in Delhi:
PROCEDURE OF PAYMENT OF STAMP DUTY ONLINE:
- Issue and execute the Share Certificate as per section 46 and Section 56 of the Companies Act, 2013.
- Make account on the above mentioned website for login.
- Fill the details in the shares Details entry form
Upload the Documents:
- PAS -3 with Challan filed to ROC
- Executed Share Certificate
- List of Allottees
- Copy of Board or shareholders resolution
- Certificate of previous stamp duty paid, if any.
NOTE: All the documents shall be in pdf format and digitally signed by Director or person authorized for the same.
5. Submit the details
6. Reference number will be generated after submission.
7. Request initiated can be seen in the status column and after 1-2 weeks the challan shall be generated.
8. Pay the Stamp Duty amount using Net Banking/Debit Card/ Cash/ NEFT/ RTGS. Print the acknowledgement and collect the e-Stamp Certificate from the nearest branch of Stockholding in Delhi by producing the printed acknowledgement at the counter.
9. Submit the e-stamp Certificate to the Collector of Stamp, NCT of Delhi and take acknowledgement of the same.
10. After scrutiny and patching of e-Stamp Certificate, the Certificate of payment of stamp duty shall be issued and Certificate can be downloaded from the status menu.
PROCEDURE OF PAYMENT OF STAMP DUTY OFFLINE (if stamp duty not paid within 30 days of issue of share certificate):
- Prepare the file for offline submission with the following documents (2 sets – 1st for submission and 2nd for Receiving):
Application/ Covering Letter duly affixed court fees stamp of the Rs. 10/- See ANNEXURE 1 for format.
2. PAS-3 with challan
3. List of allottees
4. List of director
5. Performa of application – See ANNEXURE 2
6. Authority letter in favor of Practicing Professional (CS/CA) to file the application, getting the certificate and to do further proceedings in this regards – See ANNEXURE 3
7. Photo copy of the original share certificate
8. COI, MOA and AOA of the company
9. Board Resolution of allotment of shares and authorizing any Director or to any other person to do all formalities to pay the stamp duty.
10. Previous Certificate of payment of stamp duty, if any.
2. Submit the file to the Collector of stamps, NCT of Delhi and take receiving on the second set.
3. The hearing date shall be provided via email or contact to the Collector of Stamp, NCT of Delhi, if not received the mail within 15 days of the submission of file.
4. In hearing with SDM, the penalty shall be levied up to 10 times of duty. The Penalty shall depend on justification for the late payment of the duty.
5. Take challan after 1-2 week of hearing.
6. Pay the Stamp Duty amount using Cheque / Cash and collect the e-Stamp Certificate from the nearest branch of Stockholding in Delhi by producing the payment slip at the counter.
7. Submit the e-stamp Certificate to the Collector of Stamp, NCT of Delhi and take acknowledgement of the same.
8. After scrutiny and patching of e-Stamp Certificate, the Certificate of payment of stamp duty shall be issued and dispatched at the registered office of the company via post/speed post or Certificate can be obtained after 1-2 week from the Collector of Stamp, NCT of Delhi.
Note: All the above documents shall be certified by the Director of the Company or person authorized for the same with the Stamp of the Company.
Loopholes in the Act:
The share certificate shall bear the stamp duty as per the respective State/Union Territory from where certificate is issued. So, it is not necessarily required to pay Stamp duty on share certificate in that state in which registered office of the company is situated, it shall depend on the execution of share certificate.
Execution of Share certificate:
The question always arise where to pay stamp duty – the place where registered office situated or where the resolution was passed by the Board of Directors for issuance of share certificate. It shall depend on the place where execution of share certificate shall be done.
Executed or Execution means Signed or Signature (See the definition 2(12) above).
First Concept: As the stamp duty is payable only on the instrument hence, the place where the resolution by the Board of Directors is passed is not relevant. When the Board of a company passes a resolution for allotment of shares, the instrument i.e. a share certificate is not in existence. The instrument of share certificate came into existence only when, in terms with resolution, the share certificate sealed, if any, and signed.
Second Concept: The Board meeting can be held anywhere in the India and nowhere written in the Indian Stamp Act, 1899 and Companies Act, 2013 that Share certificate shall be issued only on registered office. The Common seal provision has already become optional as per the Companies (Amendment) Act, 2015 dated 29th May, 2015.
Conclusion:
So, on the above Concept, it is clear that execution of share certificate can be made anywhere in India. Companies can take advantage of this loophole but it is depend on case to case basis that what would be beneficial for the Company.
But it is advice to all please pay the stamp duty in that state where registered office of the company is situated.
ANNEXURE 1
ON LETTER HEAD OF THE COMPANY
Dated:
To
Collector of Stamp
Head Quarter
5, Shamnath Marg
New Delhi-54
Sub: Submission of application for the payment of consolidated stamp duty chargeable on the issuance of equity shares in the matter of ………………….PVT LTD/ LTD.
Dear Sir,
This is with reference to the above subject; we are pleased to state that our company M/s. ……………………….. PVT LTD/ LTD. having registered office at ………………………………….. has allotted the following equity shares of Rs. ….. each in the board meeting.
1. Allotment of …………….. equity shares
| S.NO | DATE OF ALLOTMENT | NAME OF ALLOTTEE | TYPE OF SHARES | NOMINAL VALUE OF SHARES | NO. OF SHARES ALLOTTED | DISTINCTIVE NO OF THE SHARES |
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We are enclosing the following documents and papers along with the application for your kind perusal and records.
1. Copy of the Memorandum and Articles of Association of the company (duly signed)
2. Copy of the Forms 2 along with the copy of challan filed to the office of Registrar of companies
3. Copy of the application Performa duly filled up and signed by the directors of the company
4. List of directors of the company
5. Board Resolution in favor of Director or any other person authorize for the same to file application.
6. Certified copy of the Board Resolution of further allotment of shares.
7. Duly signed share certificate.
We would like to state that we have got the order of Payment of stamp duty of earlier allotment of shares and copy of which is attached for your reference. Therefore request your good office to issue the order of payment of stamp duty on the above mentioned equity shares.
Yours faithfully
For …………………………………..PVT LTD/ LTD.
DIRECTOR
DIN:
ANNEXURE 2
Performa to be filled up by the applicant company at the time of submission of application for the payment of consolidated stamp duty chargeable on the issuance of shares/debentures/promissory note
| 01 | Name and Address of the Company
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| 02 | Brief activity of the Company
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| 03 | Status of the Company
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| 04 | Date of Allotment of shares/Debentures/promissory notes
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| 05 | Reason of allotment of shares/Debentures/promissory notes on different dates (If applicable)
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| 06 | No. of shares/Debentures/promissory notes to be issued
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| 07 | Face value of each shares/Debentures/promissory notes to be issued
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| 08 | Premium to be charged on each shares along with return of allotment filed with ROC |
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| 09 | Distinctive No. of shares/Debentures/promissory notes to be issued
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| 10 | Name of existing Directors/Managing Director of company
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Signature of Authorized
Signatory of the Company
ANNEUXURE 3
ON LETTER HEAD OF THE COMPANY
Dated:
To
Collector of Stamp
Head Quarter, 5, Shamnath Marg
New Delhi-54
Sub: Authorization letter for collecting the certificate of consolidated stamp duty in the matter of………………………………PVT LTD/ LTD
Dear Sir,
This is with reference to the above subject; Mr. …………..(Company Secretary/Chartered Accountant in practice) available at …………………………………. is hereby authorized to collect the certificate of payment stamp duty in the matter of …………………………..PVT LTD/ LTD from your good office. He is also authorized to file, sign any papers and documents in connection therewith.
Yours faithfully
For ………………………………PVT LTD/ LTD
DIRECTOR
DIN
