The stamp duty is a tax levied upon legal recognition to pay the amount of tax on the registration of certain documents. Generally, it is an agreement or binding paper between two or more parties with the registrar. The amount depends upon the nature of documents on the certain percentage value of the document. Stamp duty is not constant across states and it differs for multiple types of documents. One of the important documents for payment of stamp duty on share is the share certificate that is provided to the holder of equity shares of the organization in the form SH-1. This certificate acts as legal evidence for ownership by mentioning the number of shares in the written form which is duly signed.
- For the issuance of Share Certificates, section 56(4) of the Companies Act, 2013 prescribes the time limit within which the company shall issue share certificates after allotment of shares and incorporation in the following cases: In the first case, at the time of incorporation, when the shares are issued to the subscribers in the Memorandum of Association then the share certificate shall be issued within 2 months from the incorporation date.
- In another case, if allotment of share is allotted at the time of incorporation, the shares certificate shall be issued within 2 months from the date of allotment. Section 21 of the Indian Stamp Act, 1899, states that stamp duty shall be paid on the issuing price and not on the face value such as the issue of security at par and premium. The stamping duty payable on shares is Rs. 1 for every Rs. 1000 shares that shall include the amount of premium. Let’s go through some important FAQs on stamp duty.
What is the time limit for payment of Stamp Duty?
Under section 32 of the Indian Stamp Act, 1899 that states about the Certificate by the Collector for payment of stamp duty within one month from the date of execution of the share certificate.
How to determine the jurisdiction for the payment of Stamp duty?
The jurisdiction can be determined, where the office of the company is registered for the payment of Stamp duty.
Let’s look at the procedure involved in the payment of stamp duty on shares
After filing all the successful details and documents on the portal, the following steps shall be kept in mind:
- The challan for paying stamp duty shall be generated after 1 week.
- The amount can be paid using Net banking, Debit Card, Cash, NEFT, or RTGS and also print the acknowledgment
- The e-stamp certificate shall be uploaded to the website
- On the complete verification, the Certificate of payment of stamp duty will be issued and the certificate can be downloaded from the portal. The whole procedure is completed within a month
What will be the consequences for not paying stamp duty?
In the circumstances of non-payment of stamp duty after issuing the share certificate and allotment of share, the company shall be liable to pay the high penalty that may extend to 10 times the payable duty.
Essential Documents for Payment of Stamp duty
At the time of incorporation, for issuing of shares to the shareholders, the following documents shall be required:
- A duly signed share certificate
- The memorandum of association, article of association of the company shall be required for payment and in the case of additional allotment, Form PAS 3 with the payment receipt filed to the ROC
- The list of subscribers and allottees
- The allotment of shares to the subscriber in the board resolution also authorizing the payment of stamp duty.
- The list of Directors and certificate of practicing professional to whom the power is delegated for paying the duty.
- The payment of stamp duty can be paid on the e-stamp website of SHCIL.
- All the above-mentioned documents shall be uploaded in the pdf format by duly signed by a concerned person.