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This article is written by Advocate Shamika Vaidya pursuing Diploma in M&A, Institutional Finance and Investment Laws (PE and VC transactions) from Lawsikho.com. Here she has listed stamp duty on Finance transaction.

The following article states Stamp duty in four states namely, Maharashtra, West Bengal, Delhi, and Karnataka on;

  1. Share Pledge
  2. Mortgage Deed
  3. English Mortgage
  4. Equitable Mortgage
  5. Guarantee
  6. Hypothecation
  7. Debentures

Share Pledge   

  • Karnataka

Article 6(2) of Schedule of the Karnataka Stamp Act states the Stamp Duty on the Agreement relating to pledge of shares which have been made by the way of security for repayment of money either advanced or to be advanced, by the way of loan or an existing or future debt. The loan should be repayable on demand and the thresholds for the stamp duty are as follows-

  • 1% on the loan/ debt amount for in case the loan amount between rupees one lakh to ten lakh.
  • 0.2% of the loan or debt amount for the loan amount exceeding 10 lakh rupees and the upper cap is rupees ten lakh.
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  • West Bengal

Article 6(2) of Schedule 1A of the West Bengal Stamp Act states the stamp duty on the agreement relating to pledge of shares where it has been made by a way of security for the repayment of money either advanced or to be advanced by way of loan or an existing or future debt. The rate of stamp duty with accordance with the time frames is as follows –

  • Rupees ten (Rs. 10/-) for every rupees thousand  (Rs. 1000/-) that is 1% if the loan/debt is repayable on demand or more than three months from the date of the instrument evidencing the agreement.
  • (0.5%) if loan/debt is repayable not more than three months from the date of the instrument.
  • Maharashtra

Article 6(2) of Schedule 1 of the Bombay Stamp Act states the stamp duty for the Agreements relating to the share pledge made by the way of security for their repayment of money advanced or to be advanced by the way of loan or an existing or future debt. The thresholds that determine the stamp-duty that is to be paid are as follow-

  • (0.1%) of the amount secured by the deed if the amount secured by the deed is less than rupees five lakh minimum cap being rupees one hundred(Rs. 100/-).
  • (0.2%) of the amount secured by the deed if the amount secured exceeds rupees five lakh, no higher cap is mentioned.
  • Delhi

Article 6(2) of Schedule 1A of the Delhi Stamp Act mentions the stamp duty for the agreement relating to the share pledge made by the way of security for their repayment of money advanced or to be advanced by the way of loan or an existing or future debt. The time frame that determines the stamp-duty that is to be paid is as follows-

  • (0.5%) of the amount secured by deed with the upper cap of rupees fifty thousand if loan /debt is repayable on demand or more than three months from the date of the instrument evidencing the agreement.
  • (0.25%) if the loan /debt is repayable is less than three months from the date of the instrument evidencing the agreement.

Mortgage Deed

  • Karnataka

The stamp duty on the agreement or memorandum of agreement according to Art. 5(h) of Schedule of the Karnataka Stamp Duty related to the mortgage-

  • When the possession of the whole of the property or a part of it is given by the mortgagor to mortgagee the stamp duty to be calculated is five percent (5%) of the market value equal to the amount secured by such deed.
  • When the possession is not given or agreed to be given the stamp duty rate is 0.5% that is 50 paise for every rupees hundred.
  • West Bengal

Article 40 of the West Bengal Stamp Act states that the stamp duty of the Mortgage deed, not being an Agreement related to-

(1) Deposit of Title-deeds (2) Pawn or Pledge (3) Bottomry Bond (4) Mortgage of a Crop (5) Respondentia Bond (6) Security Bond

And when the possession of the property (includes  a power of attorney to collect rents or lease ) or any part of the property  compromised in such deed is given by the mortgagor or agreed to be given is

  • Six percent (6%) of the market value of the property when the market value does not exceed rupees twenty-five lakh ( Rs.25,00,00/-)
  • Seven percent (7%) of the market value in case the market value of the property exceeds rupees thirty lakh (Rs. 30,00,00/-).
  • For a few properties, the stamp duty to be paid is 5% depending as per Article 40 ( c).

2) In the case where the possession is not given the stamp duty to be paid is rupees 10 for every rupees five hundred (Rs. 500/-), the upper cap being rupees one lakh (Rs. 1,00,000/-).

  • Maharashtra

The Stamp Duty for Mortgage deed when the possession of the whole or any part of the property is given by the mortgagor or agreed to be given is –

  • Three percent (3%)  of the market value if related to the movable property.
  • A duty from the range of 5/- to 25/- depending on the place of the locality that is whether it is located at any rural area. Metropolitan Region or any class of the Municipal Council

In the event when possession is not given or agreed to be given the stamp duty paid is five rupees for every one thousand that is (0.5%)  for the amount secured by such deed. The lowe cap for the payment of stamp duty is rupees one hundred rupees (Rs. 100/-) and the upper cap is ten lakh rupees.

  • Delhi

Article 40 of the Schedule 1 of the Delhi Stamp Act states that mortgage deed relating to

(1) Deposit of Title-deeds (2) Pawn or Pledge (3) Bottomry Bond (4) Mortgage of a Crop (5) Respondentia Bond (6) Security Bond.

  • When possession of the property or any part of the property in the deed is given by the mortgagor the stamp duty is three percent (3%) of the consideration amount set forth in the instrument. Further reduced to two percent (2%) in respect of individually /jointly held immovable property by woman/women. However, in case of jointly held property, the reduced rate of stamp duty shall apply only to the shares held by women/woman.  
  • When the possession is not given the stamp duty is two percent (2%) with a monetary ceiling of Rs. 2 Lacs.

English Mortgage

  • Section 58 (e) of the transfer of Property Act describes English Mortgage. In this type of mortgage, the mortgagor binds himself to repay the mortgage money on a certain date and transfers the mortgaged property absolutely to the mortgagee subject to the condition that he will re-transfer it to the mortgagor upon the payment of mortgage -money is paid. With regards to the stamp duty, there is no exemption or benefit on the reconveyance of the same property in the mortgage and the stamp duty has to be paid again during the re-transfer.
  • Mumbai

Article 51 of Schedule 1 of the Bombay Stamp Act mentions the stamp duty to be rupees five hundred (Rs. 500/-) on the reconveyance of the mortgaged property.

  • Delhi

Article 54 of Schedule 1A of the Delhi Stamp Act states the stamp duty on the reconveyance of the mortgaged property to be three percent of the consideration amount set forth in the instrument. A reduction of two percent can be availed if the property is jointly or individually owned by a women/woman. In case the property is held jointly by the women/woman the reduction will be considered only for the shares held by her.

If the reconveyance relates to immovable property situated within a municipality, Cantonment board or notified areas than the stamp duty to be paid is rupees one hundred (Rs.100/-).

  • West Bengal

Article 54 of Schedule 1A of the West Bengal Stamp Act states the stamp duty on reconveyance of the mortgaged property to be six percent of market value if the consideration is not exceeding Rs. 1,000/- in the areas to which Kolkata Improvement Act, 1911 or Howrah Improvement Act 1956 extends or other Municipal Corporations. However, if the properties are not in the Municipal Corporations the stamp duty is five percent (5%) of the market value.

In any other case, the stamp duty to be paid is rupees one hundred (Rs.100/-).

  • Karnataka

Article 44 of Schedule of the Karnataka Stamp Act states the stamp duty to be five percent (5%) of the market value to the amount of such consideration as set forth in the reconveyance if the consideration for which the property was mortgaged does not exceed rupees one thousand.

In any other case, the stamp duty to be paid is rupees one hundred (Rs. 100/-).

Equitable Mortgage

  • Karnataka

Article 6 of the Karnataka Stamp Act states the stamp duty on the equitable mortgage.

  • The stamp duty is 0.1% on the loan/debt amount if the loan amount is less than rupees ten lakh. However, the minimum stamp duty that has to be paid is rupees five hundred (Rs. 500/-).
  • If the loan amount exceeds rupees 10 lakh then the stamp duty to be paid is 0.2% on the loan amount. The stamp duty cannot be more than rupees ten lakh.
  • West Bengal

Article 6 of the West Bengal Stamp Act states the stamp duty for the equitable mortgage.

  • If the loan is repayable on demand or more than three months from the date of evidencing the agreement, the stamp duty to be paid is rupees ten for every rupee one thousand that is 1% of the amount of the loan.
  • If the loan is repayable not more than three months from the date of such instrument the stamp duty to be paid is 0.5%.
  • Maharashtra

Article 6 of the Bombay Stamp Act states the stamp duty on the equitable mortgage.

  • If the amount secured by the deed does not exceed rupees five lakh the stamp duty to be paid is 0.1% of the amount secured by such deed. However, stamp duty cannot be less than rupees one hundred.
  • If the amount exceeds rupees five lakh than the stamp duty paid is 0.2% of the amount secured by the deed.
  • Delhi

Article 6 of Schedule 1A of the Delhi Stamp Act states the stamp duty on the equitable mortgage.

  • The stamp duty is 0.5% of the amount secured by the deed if the loan is repayable on demand or more than three months for the date of the instrument evidencing the agreement.
  • The stamp duty is 0.25% of the amount secured by the deed if the loan is repayable in not more than three months for the date of the instrument evidencing the agreement.

“Guarantee” by a bank/ promoter/ parent company

  • Bombay

Article 37 of Schedule 1 of the Bombay Stamp Act states the stamp duty on the Letter of Guarantee to be rupees one hundred.

  • Delhi

Article 37 of the Schedule 1A of the Delhi Stamp Act mentions the Stamp duty on the Letter of Guarantee to be fifty rupees.

Hypothecation

  • Karnataka

Article 34(d) of the Schedule in the Karnataka Stamp Act states the stamp duty for the deed for the hypothecation of the movable property where the loan or debt is repayable on demand-

  • Where the loan amount does not exceed rupees ten lakh (Rs. 10,00,000/-) is rupees ten Rs. 10/-  for every Ten thousand Rupees (Rs. 10,000/-) the rate of stamp duty being (0.1%).
  • Stamp duty on the loan amount when it exceeds Rupees Ten Lakh (Rs. 10,00,000/-) is Rs. 20/- for every Ten Thousand Rupees (0.2%) with the upper cap of Rupees Ten Lakh (Rs. 10,00,000/-).
  • Bombay

Article 6 (2) of Schedule 1 of Bombay Stamp Act mentions that the stamp duty on the instrument evidencing an agreement relating to hypothecation of the movable property where such hypothecation has been made by way of security for their repayment of money advanced or to be advanced by the way of loan or an existing future debt-

  • If the amount secured is lesser than rupees five lakh (Rs. 5,00,000’/-) the stamp duty to be paid is (0.1%) the amount secured by such deed, the lower cap being rupees one hundred (Rs. 100/-).
  • If the amount secured is more or equal to rupees five lakh (Rs. 5,00,000/-) the stamp duty to be paid is (0.2%) of the amount secured by the deed.

Debentures

  • Bombay

Article 59 of Schedule 1 of the Bombay Stamp Act states the stamp duty on transfer of debentures with or without consideration to be (0.5 %) of consideration amount of the debenture.

  • Delhi

Article 27 of Schedule 1A of the Delhi Stamp Act states the stamp duty on the debentures transferable by endorsement or by a separate instrument of transfer to be rupees three and seventy-five paise ( Rs.3.75/-) for every rupee five hundred Rs. 500 if it exceeds rupees one thousand rupees (Rs. 1000/-).

The Stamp duty on transfer by delivery of the debenture is seven rupees fifty paise for every rupees five hundred if the amount exceeds rupees thousand.

When the consideration amount is less than rupees fifty (Rs. 50/-) the stamp duty to be paid is seventy-five paise (Rs. 0.75/-).   

  • Karnataka

Article 52 of  Schedule of the Karnataka Stamp Act states the Stamp Duty to be 0.50% the higher cap being rupees one thousand for a consideration equal to the face value of the debenture.

  • West Bengal

Article 27 of Schedule 1A of the West Bengal Stamp Act states the Stamp duty on debenture by way of endorsement or by way of the separate instrument of transfer. The stamp duty varies from the lowest being 10 paise on the amount does not exceed 10 rupees to three rupees and seventy-five paise where it is between Rs. 900 to Rs. 1000. Where the amount involved is more than rupees thousand, one rupee eighty paise for every five hundred.

The stamp on the delivery of debentures the stamp duty is three rupees and seventy-five paise for every rupees five hundred where the amount involved is more than rupees thousand.


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