Delhi: Stamp Duty on Share Issuance at 0.1%

New Delhi, Oct 8 (PTI) Companies with registered offices in the city are required to pay a stamp duty of 0.1 per cent of the share value to the Delhi government on the issuance of shares and other securities, officials said on Wednesday.

The stamp collector of the Delhi government has also written a letter to depositories NSDL and CDSL, directing them not to collect stamp duty applicable to Delhi for the issuance of shares, the officials stated.

A mechanism has already been put in place through Stock Holding Corporation of India Ltd (SHCIL) for payment of stamp duty on share certificates at its portal, and certificates are issued by the stamp collector office evidencing such payment.

The Delhi revenue department in a recent circular clarified that the stamp duty on issuance of shares by the city-based companies, was chargeable as per Schedule IA of the Indian Stamp Act, 1899, officials said.

"Under Schedule IA of the Indian Stamp Act, 1899, with certain amendments specific to the NCT of Delhi, and in accordance with Section 3 of the Act, Article 19 prescribes a stamp duty rate of 0.1 per cent of the value of shares," the circular said.

All the companies having their registered office situated in the National Capital Territory (NCT) of Delhi, have been informed that stamp duty is required to be paid on the issuance of shares at 0.1 per cent of the value of shares as applicable to the NCT of Delhi, said a senior government officer.

This is in accordance with the Article 19 of Schedule 1A of the Indian Stamp Act, 1899, he said.

The circular stated that all the listed and unlisted companies having registered offices in Delhi are directed to apply for adjudication of stamp duty for issuance of shares, irrespective of whether such certificates or documents are executed in physical or digital (DEMAT) form.

The revenue department officials said that country's primary depositors National Securities Depository Limited (NSDL) and Central Depository Service Limited (CDSL) are presently applying a rate of 0.005 per cent in terms of Schedule I of the Indian Stamp Act, 1899 (Central Act) on issuance of shares.

In the letter to NSDL and CDSL last month, the stamp collector said that CDSL has failed to submit any letter or order in which Delhi government authorised them to collect the stamp duty at the rate of 0.005 per cent on its behalf.

The department reiterated in the letter that the rate applicable to companies incorporated or having registered offices within the jurisdiction of NCT of Delhi, is 0.1 per cent of the value of shares issued.

Payment of stamp duty on the issuance of shares is a statutory requirement under the applicable state stamp acts. Non-compliance with it can attract penal consequences, including payment of penalty and interest as applicable in the Stamp Act, 1899.

The delay in remittance of stamp duty results in a direct financial loss to the state exchequer, as the duty constitutes a key source of revenue for the States, the department pointed out in its letter.