Everything you need to know about the Draft Indian Stamp Bill, 2023
Jan 24, 2024
Synopsis
The Centre has released a draft of the proposed Indian Stamp Bill, 2023, to replace the outdated India Stamp Act, 1899. The draft bill introduces provisions for digital e-stamping and aims to modernize the stamp duty regime. It proposes changes such as incorporating digital signatures, a framework for digital records, and an expanded definition of financial instruments.
The Centre has released a draft of the proposed Indian Stamp Bill, 2023, which seeks to replace the existing India Stamp Act, 1899, paving the way for a modern stamp duty regime by incorporating provisions for “digital e-stamping”. The draft bill has been floated for public scrutiny and feedback on the official website of the Department of Revenue. ET explains key changes in the bill.
What is stamp duty?
The stamp duty is a direct tax levied on all documented financial transactions such as letter of credit, sale and purchase of shares, insurance policies and property transactions. It is accepted as evidence in the court of law. Both the Centre and states levy stamp duty.
What is the need for a change in the law?
The existing stamp duty law is very old and does not capture modern instruments such as digital signatures and e-stamping across the states, leaving room for litigation and confusion. Moreover, newer financial instruments in the digital space are also not captured under the existing law.
What does the draft bill propose?
The draft bill proposes several changes, including a well-defined provision for electronic stamps, digital signature and a framework for digital record, in line with the new Information Technology Act. It proposes an expanded definition of financial instruments and seeks to empower states and the Centre to add and introduce the list of instruments for levy of stamp duty from time to time. The draft bill seeks to revise the way market value is determined in case of lease for transfer of property rights and mining lease.
The draft bill proposes simplified stamp duty provision in case of special economic zones, clearly specifying exemptions and calculation of valuation. The bill also proposes withdrawal of duty exemption for ships and vessels. The bill also talks about revised stamp duty regime in the case of Jammu and Kashmir, in the light of the abrogation of Article 370.
What changes have been proposed in terms of monetary threshold for the levy?
The bill has enhanced the monetary threshold for issuing revenue receipt to Rs 1,000 from Rs 20. The application fee for the collector has also been enhanced to Rs 1,000 from Rs 5. The bill also proposes to enhance the penalty amount to Rs 25,000 from the existing Rs 5,000, further simplifying the penalty process for non-payment of stamp duty.
The bill also has a well-defined provision to check if certain properties are undervalued, removing the time limit of the enquiry.
What will be the impact of the proposed changes?
The proposed amendments will enhance the ease of doing business by removing the obsolete law. It will also enhance the fee in sync with modern valuations which will bolster revenues of the states.
[The Economic Times]
