These days many of the Start-Up Companies are being incorporated and they might forget to Pay Stamp Duty on the Shares Issued to its subscriber or further allotment of shares if they have a professional hired they might get this done but if not they are in trouble. As per Indian Stamp Act Share Certificates are requires stamping being and Instrument failure to which the company may attract Heavy Penal charges. As per the regulations Stamp Duty is required to be paid first at the time of Incorporation of Company i.e. on issue of Shares to Subscriber and thereafter on every further allotment of shares.
Time Limit for payment of Stamp Duty without delay:-
As per Section 32 of The Indian Stamp Act, 1899, stamp duty shall be paid within 30 Days from the date of issue of Share Certificate.
Time limit of issuance of share certificate: –
As per Section 56 of The Companies Act,2013 read with relevant rules made there under company shall issue share certificate within 2 Months from the Date of Incorporation or Date of Allotment of shares.
Effectively for payment of Stamp Duty without delay total 90 Days is available to the company to pay Stamp Duty to the government.
Jurisdiction of Stamp Duty Authority?
The Stamp Duty must be paid in the City or the State where registered office of the company is situated.
Duty payable on stamping of shares
As Payment is being processed in the Office of respective State so amount and process vary from State to State for Delhi it is Rs. 1/- for every Rs. 1000/- or part thereof of the value of the share including the amount of premium. Value of the share means issue price not Face value i.e. including Securities Premium. Company shall pay the stamp duty online on below mentioned link
https://www.shcilestamp.com/estamp_share_issuance.html
(Company is required to First Register on E Stamp Portal).
Process of Payment of Duty (Without Delay):-
As Payment is being processed in the Office of respective State so amount and process vary from State to State but revolves around the below mentioned process and the same shall be completed within a Month if done without any errors otherwise it will linger on:-
1. Documents required
- Executed Share Certificate
- COI, MOA and AOA of the Company
- Copy of Board Resolution if Bonus Shares then resolution authorising Bonus Shares.
- PAS -3 with Receipt of Payment filed to ROC (in case of further allotment)
(All the documents shall be in pdf format and digitally signed by Director or person authorized for the same).
2. Once All the documents have been submitted then the challan shall be generated after 1-2 weeks after submission.
3. Pay the Stamp Duty amount using Net Banking/Debit Card/ Cash/ NEFT/ RTGS.
4. Print the acknowledgement and collect the e-Stamp Certificate from the nearest branch of Stockholding in Delhi by producing the printed acknowledgement at the counter.
5. Upload the Scan copy of e-stamp Certificate
6. After scrutiny and patching of e-Stamp Certificate, the Certificate of payment of stamp duty shall be issued and
7. Certificate can be downloaded from the status menu online
Process of Payment of Duty (With Delay):-
1. Documents required
- Executed Share Certificate
- COI, MOA and AOA of the Company
- Copy of Board Resolution if Bonus Shares then resolution authorising Bonus Shares.
- PAS -3 with Receipt of Payment filed to ROC (in case of further allotment)
(All the documents shall be in pdf format and digitally signed by Director or person authorized for the same).
2. Once All the documents have been submitted then Reference number will be generated after submission.
3. The request initiated status can be seen in the status column.
4. Now, the hearing date shall be shown in the status column after 1-2 weeks or shall be provided via email or if not received within the specified time please contact to the Collector of Stamp, NCT of Delhi.
5. In hearing with SDM, the penalty shall be levied up to 10 times of duty. The Penalty shall depend on justification of the Professional authorized for the same
6. The challan shall be generated within 1-2 week of hearing.
In Case of Duplicate Shares/ Split Shares:-
As in case of Duplicate shares/ Split Shares the Stamp Duty is payable as these are new and distinct share certificates but as the Company has already paid the Stamp Duty on the Original Shares then as per Delhi State Jurisdiction the company is required to pay Rs. 10/- per certificate.
Consequence of non payment
In case of non-payment of stamp duty or evasion of payment of stamp duty on the issue of share certificate in case of allotment of share, the company shall be liable for heavy penalty under the Act, which may extend to 10 times of the duty.
Usefull Link for this Process:-
https://shcilestamp.com/Stamp_Duty_payment_module_SystemWorkflow.pdf
https://www.shcilestamp.com/estamp_share_issuance.html
My Personal Observation while Stamp Duty Payment Process:-
As I have made the payment of Share Stamping 2 Times in my past experience, my recommendation is to hire a specialist in the payment of these duty as it is simple looking process but it is very complicated and might not be easy to be handled by the Company itself. Wrong information may lead to delay in the process and Penal Actions.
For any further Assistance from my side you can contact me or my team on the below mentioned contact details.
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Disclaimer: – The information compiled are my personal observation, Experience and Interpretation of The Indian Stamp Act, 1899, further information is updated till the date of Publish of this document i.e. on 6th July,, 2020, any further changes due to subsequent notifications and Procedural updates shall accordingly be applied The Author and publisher disclaim any liability in connection with use of this information.
Chartered Accountant and Experienced Professional with a demonstrated history of working in the financial services industry.