Centre’s Plan to Replace Indian Stamp Act, 1899: Overview of Proposed Changes

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January 31, 2024

Centre’s Plan to Replace Indian Stamp Act, 1899: Overview of Proposed Changes

• The Ministry of Finance has put forth a proposal to replace the age-old Indian Stamp Act, 1899 with a new legislation, namely the ‘Indian Stamp Bill, 2023.’ This move comes as various provisions of the existing Act are deemed “redundant” or “inoperative.” The article delves into the reasons behind this proposed change and provides insights into the key features of the draft Bill.
Understanding Stamp Duty:
• Stamp duty is a government-imposed tax crucial for registering various documents, such as agreements or transaction papers, with the registrar. The proposed legislation aims to revamp the stamp duty regime in the country, seeking public input on the draft ‘Indian Stamp Bill, 2023’ until January 17.
Need for Change:
• The Ministry of Finance identifies several shortcomings in the current Indian Stamp Act, 1899. Notably, the absence of provisions for digital e-stamping and a lack of uniform legislation across Indian states are key concerns. The existing Act, applicable to 30 states and Union Territories, coexists with six states following their own stamp acts and rules.
Key Provisions of the Draft Bill:
• The ‘Indian Stamp Bill, 2023’ introduces crucial changes, including provisions for digital e-stamping. The Bill defines “electronic stamp” or “e-stamp” as an electronically generated impression denoting payment of stamp duty through electronic means. Additionally, provisions for digital signatures are incorporated, aligning with the Information Technology (IT) Act, 2000.
Penalty Enhancements:
• The draft Bill proposes a significant increase in penalties, elevating the maximum penalty from Rs 5,000 to Rs 25,000 for contravention of any provisions. Repeat offenses may incur a daily penalty of Rs 1,000.
The Evolution from Indian Stamp Act, 1899:
• The Indian Stamp Act, 1899, a fiscal statute, has been the cornerstone for taxing transactions through stamped instruments. Instruments, as defined in Section 2, encompass any document creating, transferring, limiting, extending, extinguishing, or recording rights or liabilities. The Act also defines a “stamp” as any mark, seal, or endorsement authorized by the State Government for the purpose of duty.
• In essence, the proposed replacement of the Indian Stamp Act, 1899 with the ‘Indian Stamp Bill, 2023’ aims to address contemporary challenges and align with the digital era’s requirements. The incorporation of digital elements, increased penalties, and the quest for uniformity signify a substantial shift in India’s stamp duty landscape. Public suggestions on the draft Bill will play a pivotal role in shaping the future of stamp duty regulation in the country.

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Centre’s Plan to Replace Indian Stamp Act, 1899: Overview of Proposed Changes | Vaid ICS Institute