Procedure For Online Payment of Stamp Duty on Transfer of Shares

Procedure-Online-Payment-Stamp-Duty-Share-Transfer

Procedure For Online Payment of Stamp Duty on Transfer of Shares


According to the Indian Stamp Act, 1899, stamp duty is payable on instruments. An instrument has been defined as any document by which any right or liability is created or purported to be created, transferred, limited, extended, extinguished or recorded. Share transfer From SH-4 is an instrument of transfer and stamp duty is payable when a transfer deed is executed for transfer of shares.

According to Section 17 of the Stamp Act, the stamp duty must be paid or stamps be affixed before or at the time of execution of the transfer deed. The Section 56 of the Companies Act, 2013 mentions no company shall register transfer of shares unless a proper instrument of transfer duly stamped and executed by or on behalf of the transferor and the transferee has been delivered to the company.

Who is liable to pay Stamp Duty ?

The Section 29 of Stamp Act says that in the absence of an agreement to the contrary the expenses of providing the proper stamp shall be borne, in the case of transfer of shares of an incorporated company or other body corporate, by the persons executing the document. The transferee is not liable for stamp duty simply because an instrument of transfer of shares is required to be executed both by the transferor and transferee. Section 17 of the Stamp Act makes it clear that any instrument chargeable with duty, should be stamped before the instrument is signed. Thus it indicates that transferor has to bear the stamp duty.

Rate of Stamp Duty

Stamp duty for transfer of shares is 25 paisa for every Rs. 100 or part thereof of the value of shares as per Notification No. SO 130(E), dated 28-01-2004 issued by the Ministry of Finance, Department of Revenue, New Delhi.

Modes of Payment

1. Physical Stamping :
Note that only adhesive stamps marked as 'Share Transfer' are permitted. Thus, other ordinary adhesive stamps (usually termed as 'revenue stamps') cannot be used for share transfer. See that stamp affixed on the transfer deed is cancelled at the time or before signing of the transfer deed.

2. Online 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.

Procedure for E- stamping

1.  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.
2.  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.
3.  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.
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