assignment of debt stamp duty maharashtra notification

Stamp Duty on Debt Assignment

assignment of debt stamp duty maharashtra notification

Home | Knowledge Center | Thought Papers Stamp Duty on Debt Assignment

13th Feb, 2018

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Introduction

Assignment of debt is one of the most common forms of transactions in financial markets. It essentially entails transfer of a debt from a creditor (assignor) to a third-party (assignee). One of the biggest challenges faced in debt assignment transactions in India is the significant stamp duty implication on the deed of assignment. Considering the volume of assignment transactions undertaken generally by banks and financial institutions or by asset reconstruction companies (“ ARCs ”), the stamp duty levied becomes a significant cost in such transactions. The Constitution of India (“ Constitution ”) confers upon the Parliament and each State Legislature the power to levy taxes and other duties. The subjects on which the Parliament or a State Legislature or both can legislate are specified in the Seventh Schedule of the Constitution. The Seventh Schedule is divided into 3 (three) lists:

  • Union List;
  • State List; and
  • Concurrent List.

The Parliament has the exclusive power to legislate on the subjects enumerated in the Union List. The State List enumerates the subjects on which each State Legislature can legislate and such laws operate within the territory of each State. The Parliament, as well as the State Legislatures, have the power to legislate over the subjects listed in the Concurrent List.

The entry pertaining to levy of stamp duty in the Union List is as follows: -

“91. Rates of stamp duty in respect of bills of exchange, cheques, promissory notes, bills of lading, letters of credit, policies of insurance, transfer of shares, debentures, proxies and receipts.”

The entry pertaining to levy of stamp duty in the State List is as follows: -

“63. Rates of stamp duty in respect of documents other than those specified in the provisions of List I with regard to rates of stamp duty.”

The entry pertaining to levy of stamp duty in the Concurrent List is as follows: -

“44. Stamp duties other than duties or fees collected by means of judicial stamps, but not including rates of stamp duty.” [emphasis supplied]

From the aforementioned entries, it is clear that the power to legislate on the rate of stamp duty chargeable on instruments of debt assignment (since it is not covered under Entry 91 of the Union List) is with the State Legislature. However, the power to determine whether stamp duty can be charged or not on a specific instrument is in the Concurrent List. In this regard, it may be noted that pursuant to the Enforcement of Security Interest and Recovery of Debt Laws and Miscellaneous Provisions (Amendment) Act, 2016 (“ Amendment Act ”), the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“ SARFAESI ”) and the Indian Stamp Act were amended to provide for an exemption from stamp duty on a deed of assignment in favour of an ARC.

As mentioned above, the power to legislate on whether stamp duty is payable or not on an instrument is in the Concurrent List. Therefore, the Parliament has the power to legislate on the aforesaid subject.

Pursuant to the Amendment Act, section 5(1A) was inserted in SARFAESI which provides that any agreement or document for transfer or assignment of rights or interest in financial assets under section 5(1) of SARFAESI in favour of an ARC is not liable to payment of stamp duty.

In several States, notifications have been issued for remission and/ or reduction of stamp duties on debt assignment transactions. For instance, in Rajasthan, the stamp duty chargeable on any agreement or other document executed for transfer or assignment of rights or interests in financial assets of banks or financial institutions under section 5 of SARFAESI in favour of ARCs 1 has been remitted. Further, in Maharashtra, the stamp duty on instrument of securitization of loans or assignment of debt with underlying security has been reduced to 0.1% (zero point one percent) of the loan securitized or the debt assigned subject to a maximum of Rs. 1,00,000 (Rupees one lac) 2 .

Certain State Governments, such as those of Rajasthan and Tamil Nadu have reduced the stamp duty based on the nature of the financial asset being assigned. In Rajasthan, the stamp duty has been reduced for assignment of standard assets whilst in Tamil Nadu, the stamp duty has been reduced for assignment of non-performing assets and assignment in favour of ARCs.

This paper discusses a recent decision by the Allahabad High Court in the case of Kotak Mahindra Bank Limited v. State of UP & Ors. 3 (“ Kotak case ”), where it was held that an instrument of assignment is chargeable with stamp duty under Article 62(c) (Transfer) of Schedule 1B of the Indian Stamp Act, as applicable in Uttar Pradesh (“ UP Stamp Act ”), as opposed to Article 23 (Conveyance) of Schedule 1B of the UP Stamp Act.

The stamp duty payable in various States under Article 23 or the relevant provision for conveyance is on an ad valorem basis whereas the stamp payable under Article 62(c) or relevant provision for transfer of interest secured, inter alia, by bond or mortgage deed, is a nominal amount. For instance, in Uttar Pradesh, the stamp duty payable under Article 62(c) is Rs. 100 (Rupees one hundred).

Decision in the Kotak case

In the Kotak case, Kotak Mahindra Bank Limited (“ Kotak ”) had purchased and acquired certain loans from State Bank of India (“ Assignor ”) along with the underlying securities.

The question for consideration before the full bench of the Allahabad High Court was whether the deed executed by the applicant with the underlying securities would be chargeable with duty under Article 62(c) or Article 23 of Schedule 1B of the UP Stamp Act.

The court observed that in order to determine whether an instrument is sufficiently stamped, one must look at the instrument in its entirety to find out the true character and the dominant purpose of the instrument. In this case it was observed that the dominant purpose of the deed of assignment entered into between Kotak and the Assignor (“ Instrument ”), was to transfer/ assign the debts along with the underlying securities, thereby, entitling Kotak to demand, receive and recover the debts in its own name and right.

Article 11 of Schedule 1B of the UP Stamp Act provides that an instrument of assignment can be charged to stamp duty either as a conveyance, a transfer or a transfer of lease. The court observed that since the Instrument was not a transfer of lease, it would either be a conveyance or a transfer.

The court referred to the definition of conveyance in the UP Stamp Act, which reads as follows:

““ Conveyance ”. — “Conveyance” includes a conveyance on sale and every instrument by which property, whether movable or immovable, is transferred inter vivos and which is not otherwise specifically provided for [by Schedule I, Schedule IA or Schedule IB] [as the case may be];” [emphasis supplied]

The court held that the term conveyance denotes an instrument in writing by which some title or interest is transferred from one person to other and that the use of the words “on sale” and “is transferred” denote that the document itself should create or vest a complete title in the subject matter of the transfer, in the vendee. In this case since under the Instrument, the rights of the Assignor to recover the debts secured by the underlying securities had been transferred to Kotak, it was held that the requirement of conveyance or sale cannot be said to be satisfied.

The court further observed that debt is purely an intangible property which has to be claimed or enforced by action and not by taking physical possession thereof, in contrast to immovable and movable property. Where a transaction does not affect the transfer of any immovable or movable property, Article 23 of Schedule 1B cannot have any applicability.

The court’s view was that since debt along with underlying securities is an interest secured by bonds and/ or mortgages, transfer of such debt would be chargeable under Article 62(c).

The court further clarified that under the Instrument, merely the right under the contract to recover the debts had been transferred. Since the borrower(s) had never transferred the title in the immovable property given in security to the Assignor, the Assignor could merely transfer its rights i.e. mortgagee's rights in the property to recover the debts. It was further observed that the Assignor never had any title to the underlying securities and that it merely had the right to enforce the security interest upon default of the borrower(s) in repayment. The right transferred to Kotak was primarily the right to recover the debts, in accordance with law, by proceeding against the underlying security furnished by the bonds/ mortgage deed(s).

Therefore, the court held that the Instrument was chargeable with stamp duty under Article 62(c) of Schedule 1B of the UP Stamp Act.

Whilst coming to the conclusion that assignment of debt would not constitute a conveyance, the court referred to the definition of conveyance to state that debt is an intangible property which has to be claimed or enforced by action and not by taking physical possession thereof, in contrast to immovable and movable property.

In this regard, it may be noted that there are various judicial precedents 4 , where it has been held that an interest (including mortgage interest) in immovable property is itself immovable property.

However, even assuming assignment of debt with underlying securities over immovable property amounts to a conveyance, it

may be pertinent to refer to the definition of conveyance in the UP Stamp Act which specifically excludes a conveyance which is otherwise provided for by the Schedule to the UP Stamp Act.

Article 62(c) of the UP Stamp Act reads as follows:

“62. Transfer (whether with or without consideration) – … (c) of any interest secured by a bond, mortgagedeed or policy of insurance--”

In view of the above, transfer of any interest secured by a mortgage deed, which is covered under Article 62(c), would be excluded from the meaning of conveyance and would be chargeable to stamp duty under Article 62.

In this regard it may be pertinent to refer to the definitions of ‘bond’ and ‘mortgage deed’ under the UP Stamp Act, which is as follows:

“" Bond " includes

(a) any instrument whereby a person obliges himself to pay money to another, on condition that the obligation shall be void if a specified act is performed, or is not performed, as the case may be;

(b) any instrument attested by a witness and not payable to order or bearer, whereby a person obliges himself to pay money to another; and

(c) any instrument so attested, whereby a person obliges himself to deliver grain or other agricultural produce to another

“" Mortgage-deed ". — "mortgage-deed" includes every instrument whereby, for the purpose of securing money advanced, or to be advanced, by way of loan, or an existing or future debt, or the performance of an engagement, one person transfers, or creates, to, or in favour of another, a right over or in respect of specified property;”

In view of the above, where a debt secured by a bond or a mortgage deed is assigned under a deed of assignment, the stamp duty payable on such deed of assignment will be under Article 62(c) of the UP Stamp Act or corresponding provisions of the Stamp Act of other States.

However, in cases of unsecured loans or loans secured by an equitable mortgage (where there is no mortgage deed), the deed of assignment would attract ad valorem stamp duty chargeable on conveyance, since the same will not get covered under Article 62(c) or similar provisions in other states.

The market practice until now has been to stamp the deed of assignment of debt under the relevant article for Conveyance in the applicable Stamp Act. In fact, in States such as Maharashtra, the State Government has issued notifications for reduction of stamp duty on a deed of assignment under the article for Conveyance.

The judgment passed by the Allahabad High Court in the Kotak case may prove to be a welcome step in reducing the incidence of stamp duty on debt assignment transactions. However, it would need to be seen whether in other States a similar view is taken by stamp duty authorities.

This update has been prepared by Aastha (Partner), Debopam Dutta (Managing Associate) and Abhay Jain (Associate).

1 Notification No. F4(3)FD/Tax/2017-110 dated March 8, 2017 issued by Finance Department (Tax Division) Government Of Rajasthan.

2 Notification No.Mudrank-2002/875/C.R.173-M-1 dated May 6, 2002 issued by Revenue & Forests Department, Government of Maharashtra.

3 Reference Against MISC. Acts. No. 1 of 2016, order dated February 9, 2018.

4 Bank of Upper India Ltd. (in liquidation) v. Fanny Skinner and Ors., AIR 1929 All 161. See also Prahlad Dalsukhrai and Ors. v. Maganlal Muljibhai Tewar, AIR 1952 Bom 454 and Harihar Pandey v. Vindhayachal Rai and Ors., AIR 1949 Pat 170.

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assignment of debt stamp duty maharashtra notification

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India – Recent Amendments To The Maharashtra Stamp Act.

February 25, 2021 by Conventus Law

26 February 2021  

The Governor of Maharashtra on,  February 9, 2021 , promulgated the Maharashtra Stamp (Amendment and Validation) Ordinance, 2021 with immediate effect. Two key amendments to the Maharashtra Stamp Act, 1958 have been introduced in relation to stamping of documents encompassing multiple transactions and stamp duty rates in case of mortgage by deposit of title deeds and mortgage deed. These amendments were earlier discussed by the Maharashtra Cabinet and approved on  December 9, 2020 .  

1.    Stamping of Instruments Relating to Several Distinct Matters or Transactions  

 Section 5 of the  Maharashtra Stamp Act, 1958 (‘ Principal Act ’) which deals with stamping of various instruments relating to several distinct matters has been amended retrospectively, with effect from August 11, 2015, to include within its ambit instruments relating to not only such distinct matters but also distinct transactions.  

The Maharashtra Stamp (Amendment and Validation) Ordinance, 2021 (‘ Ordinance ’) is in line with the interpretation adopted by the Supreme Court judgment in the case of  Chief Controlling Revenue Authority v Coastal Gujarat Power Ltd. and Ors. , (‘ Coastal Gujarat Power ’) wherein it was held that a single mortgage deed executed in favour of a security trustee, for the benefit of thirteen lenders, was to be construed as thirteen distinct transactions and was to be stamped accordingly for each transaction. In the case of  Navi Mumbai SEZ v. State of Maharashtra  (‘ Navi Mumbai SEZ ’) before the Bombay High Court, it was contended on similar facts that the phraseology in the Gujarat Stamp Act, 1958 and the Principal Act was different as the term ‘distinct transactions’ was not used in the Principal Act. Relying on past precedents, the High Court held that the phrase ‘distinct matters’ appearing in Section 5 of the Principal Act is equivalent to the phrase ‘distinct transactions’ and stamp duty should be levied in accordance with the principles set out in the Coastal Gujarat Power case.  

The Ordinance has clarified the stance taken by the Courts that instruments which cover two or more distinct transactions, and cannot blend into one and be construed as part of a single transaction, will have to be stamped individually. Since the amendment to Section 5 of the Principal Act is retrospective, it must be ensured that such instruments, executed after August 11, 2015, are adequately stamped.  

2.     Changes in Stamp Duty Rates  

The rates applicable to agreements relating to deposit of title deeds, pawn, pledge or hypothecation ( Article 6, Schedule I of the Principal Act ) and Mortgage Deed ( Article 40, Schedule I of the Principal Act ) have been amended and made uniform. The changes were brought in to remedy the increasing stamp duty evasions caused due to the differences between the stamp duty rates of these instruments. These changes are prospective in nature, unlike the retrospective amendment to Section 5.  

Way Forward  

After the Supreme Court’s decision in the case of Coastal Gujarat Power, it was inevitable that changes would be introduced to stamp acts across the country to bring them in line with the view taken by the Supreme Court. In any event, the general market practice being followed in financing transactions took this view into account and stamp duty was/is usually calculated on the basis of the number of lenders / banks involved in security documentation. What remains to be seen is whether the new amendment will further allow the Revenue Department to apply this view in other cases – for example, in addition to stamp duty being paid on the basis of multiple lenders, will additional stamp duty be payable on security documents if there are multiple borrowers or security providers, multiple facilities / debts being secured or multiple properties over which security is sought to be created. What is indeed now unquestionable is that the position taken by the Bombay High Court, in the case of Navi Mumbai SEZ, has also been given legislative effect and one may no longer seek to resist the application of the view of the Supreme Court set out in Coastal Gujarat Power to instruments stamped in Maharashtra merely due to the absence of the words ‘distinct transactions’ in the Principal Act.  

Moreover, since this amendment to Section 5 of the Principal Act has been made retrospectively applicable, one may need to re-examine documents executed for transactions since August 11, 2015 to determine whether the decision of the Supreme Court in Coastal Gujarat Power has been followed. If not, one cannot rule out negative remarks being made during the audit process and documents may potentially require impounding/ adjudication in line with the provisions of the Principal Act as well.  

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Home » Blog » All-About Maharashtra Stamp Duty Amnesty Scheme – Benefits | Processes | Practical Insights

All-About Maharashtra Stamp Duty Amnesty Scheme – Benefits | Processes | Practical Insights

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  • Last Updated on 7 March, 2024

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assignment of debt stamp duty maharashtra notification

By Adv. Shyamsundar Patil, IAS (Rtd) – Former MD | Mahananda, CA. Ramesh Prabhu – Chairman and CA. Shreyash Prabhu – Chairman | Maharashtra Societies Welfare Association (MahaSewa)

Table of Contents

  • What is Stamp Duty?
  • Why to pay Stamp Duty?
  • When to pay Stamp Duty?
  • Instruments on which stamp duty applicable
  • Significance of year: 1958 – 1980 – 1985
  • Stamp Duty on Gift deed
  • Stamp Duty Amnesty Scheme 2023 – 2024

1. What is Stamp Duty?

  • It is a tax payable to the STATE GOVERNMENT
  • Payable under Section 3 of The Maharashtra Stamp Act, 1958
  • Payable on Instruments given under Schedule-I of the Act
  • Only on proper payment of stamp duty is an instrument admissible as evidence in Court
  • Stamp duty to be paid in Full and On Time
  • Delay of payment of stamp duty attracts Penalty

2. Why to pay Stamp Duty?

  • It is to be paid as LAW exists
  • To ensure Legal Validity of Document
  • As per Sec 34 , Instrument not duly stamped is inadmissible as evidence
  • If not paid, under sec 34 Penalty of 2% per month from date of signing till deficient stamp duty is paid
  • Penalty up to 400% i.e. 4 times

If penalty is not paid, then?

  • Confiscation
  • Land Seizure
  • Under Sec 59(1) of Maharashtra Stamp Act, 1958 Imprisonment for a term NOT LESS THAN 1 month which may extend to 6 months

3. When to pay Stamp Duty?

Stamp duty payable:

  • Before execution of document
  • On day of execution of document
  • On next working day of execution of document

Taxmann's Maharashtra Stamp Duty Amnesty Scheme 2023-24 | Law & Practice

4. Instruments on which stamp duty is applicable

All Instruments provided in Schedule I of Maharashtra Stamp Act, 1958.

Total 63 different types of instruments are covered in the schedule

5. Significance of year: 1958 – 1980 – 1985

11th June, 1958:

  • Bombay Stamp Act, 1958 came into effect which was later changed to Maharashtra Stamp Act, 1958 in the year 2015.

4th July, 1980:

  • Market value concept was introduced.
  • Stamp duty payable on market value or agreement value whichever is higher.
  • Earlier stamp duty payable on agreement value only.

10th December, 1985:

  • Stamp duty payable compulsory on Agreement for sale
  • Before that only Rs. 5 required and stamp duty payment required during agreement for sale

Eg: Building constructed in 1983 having 100 members and conveyance of building to society done in 2023

80 members bought flat in 1983: In 1983 – Had to pay Rs.5 as stamp duty applicable. In 2023 – Have to pay stamp duty as applicable

20 members bought flat in 1987: In 1987 – Had to pay stamp duty rate applicable. In 2023 – Have to pay Rs.100 only for deemed conveyance.

6. Stamp Duty on Gift deed

Stamp Duty on Gift deed

NOTE: 1% metro cess charged additional applicable since 8-2-2019

7. Stamp Duty Amnesty Scheme 2023 – 2024

7.1 what is the meaning of amnesty.

  • Forgiveness

Revenue and Forest department of Maharashtra has introduced Amnesty scheme to  reduce stamp duty and penalties on specified instruments Previous scheme was launched in 2019

7.2 When was the scheme launched?

Stamp Duty Amnesty Scheme 2023 was introduced and declared by the Govt. of Maharashtra on 7th December, 2023 via Govt order: Mudrank-2023/C.R.No.342/M-1(Policy)

7.3 Time period for availing benefits

Scheme was launched in Two Phases for agreements between 1st January 1980 – 31st December 2020

  • PHASE 1:  From 1st December 2023 to 31st January 2024 – 29th February, 2024
  • PHASE 2: From 1st February 2024 to 31st March 2024 – 1st March, 2024

Extended on 31st Jan, 2024 by Deputy Secretary – Shri Satyanarayan Bajaj

7.4 Instruments covered under this scheme

  • Instrument related to Conveyance
  • Agreement to sale
  • Sale Certificate
  • Agreement related to deposit of:
  • Title deeds
  • Hypothecation

For Residential/Non–Residential/Industrial use

  • Agreement or Memorandum of agreement relating to transfer of immovable property for purpose of residential use
  • Conveyance of allotment of residential/non-residential units from MHADA, CIDCO and SRA to slum dweller for purpose of rehabilitation under scheme
  • Conveyance of allotment of residential/non-residential units or houses in registered Co-op Housing Societies or any apartment whose Deemed Conveyance is pending
  • Any type of Development Agreement
  • Agreement to sell
  • Instrument of transaction of Assignment of developer rights

Related to redevelopment of any dilapidated old buildings or immovable property whose redevelopment is necessary

Any type of document related to:

  • Amalgamation
  • Arrangement
  • Reconstruction of companies

Any type of instrument executed by:

  • MHADA and its divisional board
  • Municipal Corporation
  • Municipal Council
  • Nagar Panchayat
  • Planning authorities like MIDC, SRA, etc.

First Allotment Letter or Share Certificate issued related to residential/non-residential units by Regd. Coop. Society on Government Land or by:

  • Municipal Corporation, Council or Nagar Panchayat
  • Approved planning authorities like MIDC, SRA, etc.

7.5 Benefits of the Scheme

If Instrument between 1st Jan 1980 – 31st Dec 2000 (Schedule – I) Phase I: From 1st December, 2023 to 29th February, 2024

If Instrument between 1st Jan 1980 – 31st Dec 2000 (Schedule – I) Phase II: From 1st March, 2024 to 31st March, 2024

If Instrument between 1st Jan 2001 – 31st Dec 2020 (Schedule – II) Phase I: From 1st December, 2023 to 29th February, 2024

If Instrument between 1st Jan 2001 – 31st Dec 2020 (Schedule – II) Phase II: From 1st March, 2024 to 31st March, 2024

7.6 General FAQs

Faq 1. what documents need to be submitted along with application for availing amnesty scheme.

  • Original Instrument on which some amount of stamp duty paid or specified allotment letter issued by authorities or CHS on Government land
  • Copy of Society Registration Certificate
  • Copy of BMC Assessment bill
  • Copy of IOD/CC/OC of building
  • Copy of Property Card
  • Copy of Share Certificate (front & back)
  • Copy of Aadhar Card & Pan Card along with 2 recent passport size photographs
  • Letter from society about details of flat/apartment
  • Authority Letter
  • Proof of having possession, like:
  • Electricity bill
  • Entry in Form A during society formation
  • Telephone bill
  • Election Card
  • Bank Passbook

FAQ 2. My agreement is on a piece of paper (without stamp paper), can I avail the benefit?

  • NOT ELIGIBLE for Amnesty Scheme
  • Any amount of stamp paper should be present

FAQ 3. If stamp duty and penalty paid before the Scheme was announced, can I claim refund?

NO REFUND shall be granted

FAQ 4. How to apply for Scheme and within how many days to do the payment?

  • Application to be made through Online mode through https://igrmaharashtra.gov.in website
  • Within 7 days of receipt of demand notice from Registrar, payment has to be made

FAQ 5. How to tell if stamp paper is real or fake?

We have to submit application to proper authority to verify the stamp paper along with the Original Copy of the instrument requesting to verify the stamp. The appropriate authority  issues a certificate as the case may be.

Disclaimer: The content/information published on the website is only for general information of the user and shall not be construed as legal advice. While the Taxmann has exercised reasonable efforts to ensure the veracity of information/content published, Taxmann shall be under no liability in any manner whatsoever for incorrect information, if any.

assignment of debt stamp duty maharashtra notification

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assignment of debt stamp duty maharashtra notification

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assignment of debt stamp duty maharashtra notification

The stamp duty payable during assignation of debt by Asset Reconstruction Companies – By Adv. Haaris Moosa

assignment of debt stamp duty maharashtra notification

The stamp duty payable during assignation of debt by Asset Reconstruction Companies

Adv. Haaris Moosa

Stamping has been used by litigators as a deus ex machina for long. Insufficient stamping determines the fate of a case quite independent of its facts or merits. The interplay of the stamping legislations with the Insolvency and Bankruptcy Code, 2016 (IB Code, 2016), has not been adequately analysed by either courts or tribunals.  Stamping in India is regulated by both Union and State legislations since it is covered by Entry 91 of the Union List and Entry 63 of the State List. The Union legislation is the Indian Stamp Act, 1899 (ISA, 1899) 1 and almost all the States have their own stamping statutes. The stamping legislations of old vintage have stood their ground even with the coming of avant garde legislations meant to streamline commercial transactions like the Arbitration and Conciliation Act, 1996, SARFAESI Act, 2002, Companies Act, 2013 and now the IB Code,2016.

In Phoenix ARC Private Limited, Mumbai Vs. M/S. Cherupushpam Films Pvt Limited, Ernakulam (2023) ibclaw.in 48 NCLT  (hereafter Phoenix ARC ) the question raised before the NCLT, Kochi Bench was whether stamp duty has to be paid on a deed assigning debt to an Asset Reconstruction Company (ARC).  The NCLT Kochi Bench has held that the ARC is bound to pay the appropriate stamp duty as per the relevant state legislation, in this case the Kerala Stamp Act, 1959 (KSA, 1959) 2 .  The Hon’ble NCLT held that the applicability of KSA 1959 3 is not ruled out by the prescription under Section 8F of the Indian Stamp Act, 1899 (ISA, 1899) which exempts ARCs from paying any stamp duty on “ any agreement or other document for transfer or assignment of rights or interest in financial assets of banks or financial institution s” covered under section 5 of the SARFAESI Act, 2002.

KSA, 1959 in section 25, declares the assignment of a debt to be a conveyance, and the duty payable has been pegged at 8%. In the instant case, the Tribunal found that the assignment deed was to be stamped at 8% as per Section 25 of KSA, 1959 since the agreement was made in Kerala. Interestingly in the instant case, the stamp duty as per KSA, 1959 comes to Rs. 6,33,99,500/- while the assignment deed was found to be made on a non-judicial stamp paper of Rs. 500/-. Consequently, the Tribunal found the assignment deed to be unenforceable for insufficient stamping. Phoenix ARC breaks new ground in holding that the assignment of a debt to an Asset Reconstruction Company is liable to be stamped as per the concerned state stamping legislation.

In Essar Steel India Ltd. Committee of Creditors v. Satish Kumar Gupta [2019] ibclaw.in 07 SC  (hereafter Essar Steel ) the supreme court confirmed the decision of the NCLAT, [2019] ibclaw.in 109 NCLAT in affirming the decision of the NCLT in rejecting an application that suffered from insufficient stamping. And held that “Further, the submission of the Appellants that they have now paid the requisite stamp duty, after the impugned NCLAT judgment, would not assist the case of the Appellants at this belated stage. These appeals are therefore dismissed.” 4 Quite to the contrary, in Praful Nanji Satra v. Vistra ITCL (India) Ltd. (2022) ibclaw.in 550 NCLAT , the NCLAT went on to reject an argument for dismissal of an application for insufficient stamping, holding that the only issue that the NCLT in IBC proceedings can look at is whether there has been a default, and nothing further. It was also held that insufficient stamping is a curable defect. The effect of insufficient stamping has attracted contradictory judgments from the NCLAT and the Supreme Court. However, Phoenix ARC follows the correct law laid down by the Supreme Court in Essar Steel .

It is to be noted that proceedings under Code are non-adversarial. Any applicant seeking to initiate corporate insolvency proceedings is required to produce documents that satisfy the Adjudicating Authority (the NCLT) proving the default committed by the corporate debtor. Such an applicant is also required to ensure that the financial contracts on which they rely are legally sound and are not truncated. While structuring true sale transactions for assignment of debt (standard assets or NPA), compliance under the applicable stamping legislations must be ensured to avoid legal complications.

Disclaimer:  The Opinions expressed in this article are that of the author(s). The facts and opinions expressed here do not reflect the views of IBC Laws ( http://www.ibclaw.in ). The entire contents of this document have been prepared on the basis of the information existing at the time of the preparation. The author(s) and IBC Laws ( http://www.ibclaw.in ) do not take responsibility of the same. Postings on this blog are for informational purposes only. Nothing herein shall be deemed or construed to constitute legal or investment advice. Discussions on, or arising out of this, blog between contributors and other persons shall not create any attorney-client relationship.

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India: Stamp Duty: A Brief Overview In The State Of Maharashtra

An infrastructure project involves, besides the actual project documents, finance documents, security documents etc. Dealing with land plays a critical role in most projects. The role of a legal counsel includes preparing, executing, vetting of these documents and structuring a wholesome transaction. As the costs of these projects are enormous so are the resultant implications on stamp duty. Since, the ISA, BSA (both defined later) and other stamp acts have diverse classifications of instruments under which each of them are covered, it is necessary for legal counsel to understand the background and nature of the stamp duty and its effects/impact on the entire project.

Stamp duty is a kind of tax, just like sales/income tax etc. and justifiably its basic purpose is to raise revenue for the Government. Thus, like any other tax, stamp duty must be paid in full and on time to the Government, with delays attracting penalties. Broadly speaking, stamp duty is levied on an instrument (and not on a transaction); stamp duty is payable on property (whether immovable/ movable or tangible/intangible) either on a fixed basis or on the basis of the consideration mentioned in the instrument as the case may be. In case of immovable property, there is an additional concept of valuation of the property, which is also taken into account while determining the stamp duty payable.

In India, the Indian Stamp Act, 1899 (ISA) is the Central Legislation while the States have their own local stamp acts to deal with issues arising within that particular State. The Bombay Stamp Act, 1958 which came into force on 16th February 1969 (BSA) is the law for stamp duty within the State of Maharashtra. Constitution of India empowers both the Parliament and the State Legislature to make provisions and laws for stamp duty within its ambit. Accordingly, ISA covers certain documents as specified therein. An instrument is defined under BSA to include every document by which any right or liability is, or purports to be created, transferred, limited, extended, extinguished or recorded, but does not include a bill of exchange, cheque, promissory note, etc. These documents that have been excluded, as aforesaid are governed under the ISA. The word 'document' is neither defined either in ISA nor the BSA and one needs to rely upon the Evidence Act, 1872 and The General Clauses Act, 1897 for its interpretation. With the enactment of Information Technology Act, 2000 the term 'document' also includes any electronic record as defined therein. Popularly, the words instruments and documents are used interchangeably.

Often the phrase 'duly stamped' is used in relation to an instrument. It connotes that an instrument bears an adhesive/impressed stamp of not less than the proper amount. Stamp papers can be validly purchased from the State 'authorized vendors' and in cases of high denomination, stamp duty can also be paid by way of franking the instrument again through the State authorized channels. A duly stamped document can be admitted as evidence in any lawful transaction or in a court of law with few exceptions under the criminal proceedings.

In Maharashtra, prior to 1st May, 1994 stamp papers could be purchased in the names of advocates or in any other name. However, thereafter stamp papers are to be purchased in the name of one of the parties to the instrument. Furthermore, the validity of stamp papers are restricted to a period of 6 months and if the stamp paper is used thereafter then it is deemed that the document is executed on ordinary paper without a stamp.

If an instrument falls within several descriptions in Schedule I of the BSA with different rates of duties, then the instrument is chargeable with the highest of the duty prescribed. In addition, BSA also prescribes methodology for adjudication (proper valuation), refund of duties, grievance processes and convictions etc. The Collector is normally authorized or vested with the power of adjudication. If a document is not stamped or adequately stamped, it is likely to be impounded.

Circumventing the instruments classifications with a view to avoid or reduce duties has long been historically established. In order to bring this circumvention/avoidance within the taxing network, the classifications of instruments, rates etc. are revised periodically. The Government is to promote certain industries, remit either in full or in part the stamp duty payable by such identified industries.

The Department of Registration and Stamps, Government of Maharashtra, the 2nd highest revenue earning department, had a vast presence with over 400 offices managed by 2500 employees and generates various job opportunities. It undertook an ambitious IT project called SARITA (Stamps and Registration Information Technology Based Administration) whereby all the sub registrar/district level/division level offices as well as the Head Quarters at Pune have been computerized and automated. SARITA has been operational since January 2001 and has registered more than 2 million documents with the estimated revenues exceeding Rs. 5000 crores.

The challenge for legal counsel in structuring documents arises to make it 'stamp duty friendly' with the different slabs and classifications available. Care needs to be taken as the documents attract duty on arrival within a State and with eager regulators around, it's best to be conformist in approach.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

assignment of debt stamp duty maharashtra notification

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assignment of debt stamp duty maharashtra notification

assignment of debt stamp duty maharashtra notification

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Empanelment of Retired Assistant Director of Town Planning, Town Planner & Assistant Town Planner for appointment on service contract. Download

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Appointment order of Secondary Enrollment Grade-1 / Stamp Inspector Group B (Non-Gazetted) selected by Maharashtra Public Service Commission.

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Execution of notifications and orders related to agriculture and crop loans by farmers (English)

With effect from 1st April, 2016, if the residential or agricultural property is gifted to husband, wife, son, daughter, grandson, granddaughter, wife of deceased child, a registration fee of Rs.200/- will be payable on deed of gift.

Citizen can check whether any document is truly registered or not through a SMS only. For details see the User Guide in the Downloads> User Guide> Document verification through SMS​

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assignment of debt stamp duty maharashtra notification

Department of Revenue, Registration and Stamp Duty, Govt of Maharashtra

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assignment of debt stamp duty maharashtra notification

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assignment of debt stamp duty maharashtra notification

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assignment of debt stamp duty maharashtra notification

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assignment of debt stamp duty maharashtra notification

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assignment of debt stamp duty maharashtra notification

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assignment of debt stamp duty maharashtra notification

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assignment of debt stamp duty maharashtra notification

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assignment of debt stamp duty maharashtra notification

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assignment of debt stamp duty maharashtra notification

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assignment of debt stamp duty maharashtra notification

Draft Document Details

Online submission of digital document.

What is this? You can upload the draft of document to be registered. This facility will save the time for scrutiny of document at Sub Registrar Office and also the time for scanning of document. At present, available for non-executed document only. Shall be provided soon for executed document. At Present this facility is available for SR Mumbai-2, SR Andheri-2, SR Borivali-2 and SR Kurla-2 only. Shall be provided for other Offices soon.

Work Flow : 1. Preparation: Prepare your draft, don’t execute (don’t sign), Put the future date of execution, not earlier than 3 days from the date of online submission, S​e​prate out the page/s on which execution to be done (i.e. the execution page/s), Convert the word file of the draft document without execution page/s in to pdf format, (No scanned file), Similarly convert the word file of the execution page/s in to pdf format. (No scanned file) If you have the scanner, scan the required annexure ​ including ID proofs, PAN etc. and save it in separate pdf files.

2. Submission: Attach the pdf files of Draft and execution page at relevant place and submit. It is optional to attach at relevant place and submit the required annexure/s.

3. Scrutiny by Sub Registrar: The Sub Registrar will check the draft and communicate you whether the document is qualified for registration or not. You can check the status in the PDE Module by using your user id and password. If qualified, you can visit the Sub Registrar’s office on scheduled date of execution (i.e. Date of execution mentioned in the draft). If queried by Sub Registrar, edit the draft accordingly and upload the modified file.

4. Activity at Sub Registrar office: All the executants (i.e. the executing parties to the document) and the witnesses have to be present simultaneously in Sub Registrar office on the date of execution. No need of document to bring, only the required annexures and photos of Parties will be required. Sub Registrar will take printout of the uploaded document and handover to the party, All parties will execute (sign) the document and witnesses will sign. Shall also affix the photos and Thumb impression at relevant place.

5. Activity at Sub Registrar office: The presentation, Admission, Identification and Registration will take place as usual.

6. Scanning: In the initial days, Sub Registrar will put the seal, paging on entire document and scan it and shall handover it to the presenting party. At the later stage, it will be strived for scanning of execution page, summary I and II and merging it with the Digital Document and save it.

Notification !!

Notifications .

"i-Sarita and PDE and Scanning application" services will not be available because of Maintenance activity from 18 th of March 2024, Monday, 10.00 pm to 19 th of March 2024, Tuesday, 12.30 am.

Due to some technical issues email service is not available for downloading the scanned copies of i-Sarita registered documents. Citizens can use the paid e-Search Service to download the documents. Inconvenience is deeply regretted...

Regarding publication of Maharashtra Stamp Duty Abhay Yojana 2023. Download

Regarding the filling up of posts in the cadre of officers on contract basis. Download

Regarding the filling up of posts in the cadre of officers on contract basis - extension. Download

Phase out of existing fingerprint L0 registered devices from Aadhaar authentication ecosystem (eKYC). Download

L1 device Information

  • "PDE and DHC" services will not be available because of Maintenance activity from 29 th of December 2023, Friday, 10.00 pm to 30 th of December 2023, Saturday, 06.00 am. Inconvenience is deeply regretted...

Important !!

e - Valuation 2.0 βeta version is not available till 12 th March 2024, 5.00 pm because of maintenance activity.

IMAGES

  1. Stamp Duty and Registration Charges in Maharashtra

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  2. Maharashtra E Stamp: All you Need to Know

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  3. Stamp Duty and Registration Charges in Maharashtra in 2022

    assignment of debt stamp duty maharashtra notification

  4. Stamp Duty and Registration Charges in Maharashtra in 2024

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  5. Stamp Duty and Registration Charges in Maharashtra in 2022

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  6. Stamp Duty In Maharashtra 2020 Notification / Real Estate News Globe

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VIDEO

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  2. Maharashtra Stamp Duty Amnesty Scheme 2023

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  4. How to Crack Bank of Maharashtra Generalist Officer Scale 2 & 3| Crash Course 2023| Last 10 Days

  5. Online And Offline Rent Agreement Registration in Maharashtra ऑनलाईन भाडेकरार दस्त नोंदणी

  6. Maharashtra Stamp Duty Amnesty Scheme-2023-24 || Prabhu Se Khas Baat ES 158 || MahaSeWA News

COMMENTS

  1. Stamp Duty on Debt Assignment

    Further, in Maharashtra, the stamp duty on instrument of securitization of loans or assignment of debt with underlying security has been reduced to 0.1% (zero point one percent) of the loan securitized or the debt assigned subject to a maximum of Rs. 1,00,000 (Rupees one lac) 2. Certain State Governments, such as those of Rajasthan and Tamil ...

  2. Stamp Duty on Assignment of Receivables

    Rajasthan Stamp Act, 1998 (Act No. 14 of 1999) and in supersession of this department's Notification No. F.4(4) FD/Tax/2015-230 dated March 9, 2015, the State Government, stamp duty chargeable on the instrument of debt assignment executed in respect of performing assets (standard assets) is charged at the rate of 0.15 percent of the amount of ...

  3. PDF Schedule I and II to THE MAHARASHTRA STAMP ACT (BOM. ACT LX OF 1958)

    THE MAHARASHTRA STAMP ACT (BOM. ACT LX OF 1958) (As modified upto the 01st June 2022) Page 2 of 40. ... ACKNOWLEDGEMENT of — 2 [(1) a debt written or signed by, or on behalf of, a debtor in order to supply evidence of such debt in any book (other than a banker's pass book) or on a separate piece of paper ... the stamp duty under this ...

  4. Maharashtra Stamp Act amended to clarify legal stand in case of

    Particulars: Erstwhile stamp duty: Amended stamp duty: Remarks: Mortgage by deposit of title deeds under article 6(1) of schedule I: If amount secured by the deed is more than Rs. 5 lakhs, rate of stamp duty is 0.2% of the secured amount.. If amount secured by the deed is more than Rs. 5 lakhs, rate of stamp duty is 0.3% of the secured amount.. Rate of stamp duty has been increased from 0.2% ...

  5. PDF The Maharashtra Stamp Act*

    THE MAHARASHTRA STAMP ACT (BOM. ACT LX OF 1958) (Modified up to the 03 Jun 2022) 1958:Bom. ... How transfers in consideration of debt or subject to future payments, etc., to be charged. 20 . 26. Valuation in case of annuity, etc. 20 ... 63A Non-remittance of stamp duty within prescribed time to be offence. 40 64. Institution and conduct of ...

  6. PDF BOMBAY ACT No. LX OF 1958.

    government of maharashtra law and judiciary department bombay act no. lx of 1958. the maharashtra stamp act. (text as on 1st january 2022)printed in india by the government central press, charni road, mumbai 400 004 and published by the director, government printing stationery and publications, maharashtra state, mumbai 400 004. 2022 [price : rs. 122.00]

  7. India

    26 February 2021 . The Governor of Maharashtra on, February 9, 2021, promulgated the Maharashtra Stamp (Amendment and Validation) Ordinance, 2021 with immediate effect.Two key amendments to the Maharashtra Stamp Act, 1958 have been introduced in relation to stamping of documents encompassing multiple transactions and stamp duty rates in case of mortgage by deposit of title deeds and mortgage deed.

  8. Amendments To Maharashtra Stamp Act: Increase In The Ceiling On Stamp

    The 2021 Amendment Act has come in quick succession of the Maharashtra Stamp (Amendment and Validation) Act, 2021 by which the GoM reinforced the Coastal Gujarat Judgment. One of the welcome changes brought about by the 2021 Amendment Act is the ceiling on the maximum stamp duty payable on consortium security documents.

  9. India: FAQs On Payment Of Stamp Duty In Maharashtra

    According to the Maharashtra Stamp Act, 1958, stamp duty shall be paid vide impressed stamps or adhesive stamps 7. Hence the stamp duty on any instrument (including an electronic document) may be paid via adhesive stamps, non-judicial stamp paper, franking machines, labels being affixed and impressed by proper officer or receipt of e-payment of ...

  10. PDF J U D G M E N T

    Notification bearing No.GHM/2002­5­M STP­102000­2749/H­1 dated 25th January, 2002, the Government ordered the reduction of stamp duty payable on an instrument of securitization of loans or assignment of debt with underlying securities, to 75 paise for every Rs.1000 or part thereof.

  11. Stamp Duty on Assignment of Debt States & UTs wise in India

    Tripura. (a) The Indian Stamp Act, 1899. Uttar Pradesh. 0.1% subject to a maximum of Rs. 1 Lakh. (1% extra duty on the account of each of the Local Laws is levied for immovable properties, if the transfer is covered by the said Act) (a) The Indian Stamp Act, 1899. (b) The Indian Stamp (Uttar Pradesh Amendment) Act, 1997.

  12. All-About Maharashtra Stamp Duty Amnesty Scheme

    The text provides a comprehensive guide on Stamp Duty in Maharashtra, covering its definition, legal necessity, timing, applicable instruments, historical significance, specific schemes like the Stamp Duty Amnesty Scheme 2023-2024, and FAQs to assist in understanding and complying with stamp duty regulations.

  13. The stamp duty payable during assignation of debt by Asset

    In the instant case, the Tribunal found that the assignment deed was to be stamped at 8% as per Section 25 of KSA, 1959 since the agreement was made in Kerala. Interestingly in the instant case, the stamp duty as per KSA, 1959 comes to Rs. 6,33,99,500/- while the assignment deed was found to be made on a non-judicial stamp paper of Rs. 500/-.

  14. India: Allahabad High Court On Stamp Duty On Debt Assignment

    Further, in Maharashtra, the stamp duty on instrument of securitization of loans or assignment of debt with underlying security has been reduced to 0.1% (zero point one percent) of the loan securitized or the debt assigned subject to a maximum of Rs. 1,00,000 (Rupees one lac) 2. Certain State Governments, such as those of Rajasthan and Tamil ...

  15. PDF Provisions, Applicability and Recent Amendments to The Maharashtra

    THE MAHARASHTRA STAMP ACT, 1958 by Mahima Sakhlecha ABSTRACT This paper deals with the Maharashtra Stamp Act, 1958 and the recent amendments related to the same. Stamp Duty is an important part of Land Law and the relevant provisions, application and relevant judgments of the same are discussed in the paper. Stamp duty is charges by the

  16. Stamp Duty Exemption Under IT/ ITES Policy, 2023

    As envisaged in the IT Policy of 2023 (2023 IT Policy), Maharashtra Government, in accordance with the powers vested in it under Section 9 of the Maharashtra Stamp Act on February 1, 2024, issued ...

  17. PDF Stamp Duty and Latest RBI Guidelines

    Ceiling on Stamp duties Sr. No State Stamp duty Payable Maximum ceiling limit (in Rs.) 1 Delhi 0.1% of the loan amount securitized or debt assigned with underlying securities subject to maximum limit. 1,00,000 2 Maharashtra 0.1% of the loan amount securitized or debt assigned with underlying securities subject to maximum limit. 1,00,000

  18. PDF Stamp Duty in Maharashtra on common Bank Documents as at- 20.1

    Stamp Duty in Maharashtra on common Bank Documents as at- 20.1.2022 Document [Article] For Amount Stamp Duty (from Date) Acknowledgement of Debt [Article 1(1)] Up to Rs 5,000. - Nil Above Rs 5,000. - but less than Rs 10,000 Re 1 Rs 10,000. - and above but less than Rs 10 lacs Rs 50 Rs 10 lacs and above Rs 100 Loan Agreement [Article 5(h)(iv)]

  19. Stamp Duty: A Brief Overview In The State Of Maharashtra

    The Bombay Stamp Act, 1958 which came into force on 16th February 1969 (BSA) is the law for stamp duty within the State of Maharashtra. Constitution of India empowers both the Parliament and the State Legislature to make provisions and laws for stamp duty within its ambit. Accordingly, ISA covers certain documents as specified therein.

  20. PDF Stamp Duty on lease agreements applicable in Maharashtra

    The stamp duty on the lease agreements to be executed in the State of Maharashtra is governed by Article 36 read with Article 25 of Schedule 1 to the Act. The term "Lease" has been defined in the Bombay Stamp Act in Section 2(n) which can be read as: "lease" means a lease of immovable or movable (or both) property, and includes also, -. a ...

  21. Department of Registration & Stamps

    Maharashtra Stamp Duty Abhay Yojana 2023 under 53 A The following list of pending cases has been published under Abhay Yojana. Citizens should contact the office of Joint District Registrar and Stamp Collector of the concerned district to take advantage of this. ... Notifications !! Due to some technical issues email service is not available ...