ISSUE: Notice from the Collector of Stamps, Delhi, by companies registered in the National

Capital Territory of Delhi, for demand of stamp duty on the share certificates issued by them as
per the rates applicable in the National Capital Territory of Delhi.
Background: As per Section 3 of Indian Stamps Act 1899, Every Share Certificate must bear
the necessary stamp duty as per the Stamp Act of the respective State/ Union Territory from
which Certificate is issued. The rates of stamp duty can be obtained with reference to relevant
article of given State Act.
According to Companies Act, 2013,- Every person whose name is entered as a member in the
register of members shall be entitled to receive share certificate within two months after
allotment (or within such other period as the conditions of issue shall provide).
According to Indian Stamp Act, 1899, the company shall pay the stamp duty within thirty days
after the Issue of Share Certificate.
The Share certificate must bear stamp duty as per State Stamp act. Stamp duty can be paid by
putting adhesive stamps and cancelling the same. In case of issue of large number of shares,
stamp duty can be paid in lump sum and this fact should be mentioned on the share certificates.
In such cases, putting adhesive stamp on each share certificate is not necessary. Stamp duty is
payable even if security is issued in dematerialized form.
Stamp duty is payable on issue price and not on the value of security.
Stamp duty on share certificate is State subject, but Stamp Duty on Debenture Certificate is a
Union Subject.
Main Questions:
1- Place of levy of stamp duty
By virtue of these powers, levy and collection of stamp duty on issue of share certificates
falls within the sphere of State Legislature and accordingly many State Governments
adopted the provisions of Indian Stamp Act 1899 for its applicability in their region with
or without any modification or amendments while others opted for enactment of separate
statute governing the levy and collection of stamp duty in their jurisdiction.
For instance, Legislature of the National Capital Territory of Delhi and State of Haryana
has adopted the provisions of Indian Stamp Act 1899 with modifications and amendments
in the Act while the Legislature of Uttar Pradesh earlier adopted the provisions of Indian
Stamp Act 1899, but in the year 2010, enacted there separate statutes governing levy and
collection of stamp duty in its region.
Hence, the levy and payment of stamp duty on issue of share certificates is governed by
the provisions of Stamp Act as applicable to the respective state, where the instrument is
first executed, since the subject falls within the State List of the Constitution of India.

So all companies having their registered office in the National Capital Territory of Delhi
and who have not paid the duty on share certificates with the Collector of Stamps,
Government of Delhi should ensure due compliance of stamp law in order to validate
their instruments evidencing the rights and entitlements on the shares contained therein
either by making due payment or by taking up the matter with the authority, in case the
duty is not leviable in Delhi.
2-Value on which stamp duty is to be charged:
Another important issue is the determination of the value on which the stamp duty to be
levied i.e. whether it should be the face value or the consideration value which means
face value plus premium, if any, paid. The Indian Stamp Act in respect of issue of shares
in physical form provides for levy of duty on value of shares and where shares are issued
in dematerialized form, the duty shall be levied on the amount of securities issued.
It is to be clarified that all the aforementioned issues shall be determinable in strict
interpretation of the law governing the subject matter with due consideration of the facts
of each case.
3-Issue of Share Certificate from other State:
Stamp duty payable on share certificate is lower in some states than other. It is higher in
Maharashtra and probably Lowest in Delhi.Some companies having registered office in
Maharashtra Issue shares from other state by holding Board Meeting in that State.
BUT Companies Act nowhere specifies that share Certificates must be Issued from
Registered Office only. So now companies have to pay Duty on issue of Share
Certificate as per State where Registered Office of company is situated.
4-Stamp Duty on Issue of Duplicate Share Certificate:
1-whether stamp duty is payable again when a duplicate or split share
certificate is issued.
Section 3(a) of Indian Stamp Act states that every instrument mentioned in the Schedule I
of Indian Stamp Act which, not having been previously executed by any person, is executed
in India; shall be chargeable with stamp duty of the amount indicated in Schedule I.Delhi
Stamp Act.
As per Delhi Stamp act, stamp duty shall be paid on Certificate or other document
evidence the right or title of the holder thereof, or any other person, either to any shares,
one thousand stock in or of any incorporated Co. or other body corporate or to become
proprietor of shares, scrip or stock in or of any such Company or body.
1. Rate of the said stamp duty in Delhi: One rupee for every one thousand, or a part
thereof, of the value of the shares, scrip or stock including the amount of PREMIUM.

Penalty shall be 1 to 10 times depending upon the order being passed by department.
However penalty can be lower than 1 time as decided by authority.

PROCEDURE FOR SUBMISSION OF STAMP DUTY IN DELHI:

A. First Company will Allot Shares.
B. Company will is issue Share Certificates within 60 days of Allotment of Shares.
C. Prepare documents:
After issue of shares, Stamp duty shall be paid to the exchequer of government within 30
(Thirty) days from issue of Share Certificates. Following documents shall be prepared:
Covering Letter (duly affixed Rs 10/- Court Fee Stamp).
1- List of Existing directors.
2-List of shareholders.
3-Original Share Certificate
4-Certified Copy of Form-2/ PAS-3 with Challan.
5-Certified Copy of Memorandum & Article of Association.
6-Rs 10/- as adjudication fee to be deposited with cashier of the department.
D. Submission Document
At the time of issue of shares, Stamp duty shall be paid to the exchequer of government
within specified period. Above discussed documents shall be prepared & submitted to
Revenue Department within 30 days of Issue of Share Certificates.
E. PREPARATION OF DUTY CHART
Duty Chart is prepared by the department nearly about 15 to 20 days after submission of
documents.
Duty Chart includes Name of the Company, Address of the Company, Face Value of
Shares issued, Premium Charged on Shares, Date of Issue, etc.
F. PREPARATION OF CHALLAN
Challan has been issued by department in Triplicate on the basis of Duty Chart Made.
The same Challan has to be paid at Specified Bank (List of Bank will be provide by
Department) within 5-6 working days for smooth working of your file/case
G. PAYMENT OF CHALLAN
After the preparation of Challan (in triplicate), you have to make payment of Challan (in
triplicate) in Specified Banks within 5 6 Working Days, recommended.
H. DEPOSIT OF CHALLAN
i. After submission of challan, we have to deposit a copy of challan with the revenue
department.
ii. After verification of challan (after 20 days of depositing of challan), department issue
certificate of Stamp duty paid (1 day to 100 days).

Sources:1- http://taxguru.in/company-law/stamp-duty-issue-share-certificates.html

2- http://www.mondaq.com/india/x/202892/Shareholders/Stamp+Duty+On+Share+Cer
tificates
Statutes:
1- Indian Stamps Act 1899
2- Companies Act, 2013
3- Delhi Stamp Act.