Indian Stamp Bill 2023

01.02.2024

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Why in the  news?

Recently, the Ministry of Finance invited suggestions on the draft ‘Indian Stamp Bill, 2023’ from the public.

Key Point

The Centre has proposed repealing the Indian Stamp Act, 1899 and bringing in a new law for the stamp duty regime in the country.

About stamp duty

• It is essentially a govt tax, which is levied to register documents, like an agreement or transaction paper between two or more parties, with the registrar.
• Usually, the amount specified is fixed based on the document’s nature or is charged at a certain percentage of the agreement value stated in the document.
• Stamp duties can be levied on bills of exchange, cheques, promissory notes, bills of lading, letters of credit, policies of insurance, transfer of shares, debentures, proxies and receipts.
• Stamp duties are accepted as valid evidence in a court of law.
• Stamp duties are levied by the Centre but appropriated by the concerned states within their territories under Article 268 of the Constitution.

About Indian Stamp Bill, 2023

• The Indian Stamp Bill, 2023 is a draft bill prepared by the Department of Revenue, Ministry of Finance.
• The bill aims to replace the Indian Stamp Act, 1899 and align it with a modern stamp duty regime.

Need for new bill

• Several provisions of the Indian Stamp Act, 1899 have now become redundant or inoperative.
• For instance, there was a lack of provisions for digital e-stamping in the 1899 Act.
• Also, in earlier act, there was lack of uniform legislation for all Indian states regarding stamp duties.
• The 1899 Act extended to 30 states and Union Territories combined while six states followed their own stamp acts and rules.

Key features

• In order to equip India for a seamless digital era, the bill includes provisions for digital e-stamping.
• It defines an electronic stamp or e-stamp as an electronically generated impression denoting the payment of stamp duty by electronic means or otherwise.
• There are also provisions for digital signatures.

○Digital or electronic signature refers to the authentication of any electronic record by a subscriber through an electronic method or procedure.

• The draft Bill also proposes to raise penalties.

○It seeks to increase the maximum penalty amount from Rs 5,000 to Rs 25,000 for contravening any provisions of the law and impose Rs 1,000 per day for repeated offences.

Indian Stamp Act, 1899

• The Indian Stamp Act, 1899 is a fiscal or money-related statute that lays down the law relating to tax levied in the form of stamps on instruments recording transactions.
• Section 2 of the Act says that an instrument refers to any document that creates, transfers, limits, extends, ends, or records a right or liability.
• According to this Act, a "stamp" means any mark, seal, or endorsement made by a person authorized by the State Government.
• This definition also covers adhesive or impressed stamps used to charge duty under this Act.
• Section 3 of this Act prescribes that certain instruments or documents shall be chargeable with the amount indicated in Schedule 1 of the Act.
• These include bills of exchange or promissory notes.

                                             Source:indian Express