Wednesday, 2 December 2015

STAMPING AND REGISTRATION


Whether the Promissory Note which is not adequately stamped us admitted in evidence?
The Indian Stamp Act has spell out what are the documents which are admitted as evidence though insufficiently stamped. Section 35 of the Act deals with this situation. There are certain documents if insufficiently stamped which are not admitted in evidence and another category of insufficiently stamped documents which are admitted in evidence on payment of penalty.The following documents if not sufficiently stamped are not admitted in evidence, even on payment of penalty:
  1. Promissory note.
  2. Bill of Exchange.
However, it is clarified that an insufficiently stamped  promissory note executed as collateral security cannot be accepted in evidence whereas some other evidence can be  adduced to prove oral agreement in respect of the debt.

Who is to decide the proper stamp duty on any instrument in case of any doubts?
Stamps Acts of various State Governments and Central Government provide the stamp duty payable on documents. In case of any doubt the concerned party may approach the Collector or the District Registrar and apply for deciding the correct stamp duty payable on the instrument, on payment of certain fees/charges.
The Collector or the District Registrar may call for the abstract of the instrument and also evidence to prove that all the circumstances and facts are correctly set forth in the instrument, and accordingly the Collector there of will decide the correct stamp duty payable and on payment of duty or any shortfall, shall certify to that effect. Such person need not pay any penalty or fine. If the document does not attract any stamp duty, he shall certify accordingly.   

 Can document be stamped after signed by the parties?
No, cannot be. All the documents need to be stamped and cancelled at the time of execution. Execution means the process of affixing the signature on the document. Adhesive stamps including revenue stamps should also be cancelled by the party’s signature across the face of the stamp evidencing that the stamp/s were cancelled at the time of execution of the document.  Documents which are to be franked should not bear the date of execution and signature of the parties. The documents are to be dated at the time of franking and the parties have to execute the document after they are franked.  

If an instrument is under-stamped by accident or ignorance of the parties, can it be rectified?  If so, what is the procedure ?
Yes. There is provision to rectify the mistake.  Section 41 of Indian Stamp Act, and Section 40 of the Karnataka Stamp act provide for such situation.  The time limit is one year from the date of execution.  But this relief is not applicable for Promissory note and Bill of Exchange. The concerned parties on his own may produce the document, may bring it, to the notice of the Collector or District Registrar the fact that the instrument is under-stamped and agrees to pay the amount of the shortfall. If the Collector or the District Registraris satisfied that the instrument is under-stamped by accident, mistake or urgent necessity he may permit the party to pay the correct stamp duty and shall certify to that effect.    

Section 41 of the Act says: Instruments unduly stamped by accident.-
If any instrument chargeable with duty and not duly stamped, not being an instrument  chargeable [with a duty not exceeding ten naye paise] only or a bill of exchange or promissory note, is produced by any person of his own motion before the Collector within one year from the date of its execution or first execution, and such person brings to the notice of the Collector the fact that such instrument is not duly stamped and offers  to pay the Collector the amount of the property stamp duty, or the amount required to make up the same, and if the Collector is satisfied that the omission to pay such stamp duty on such instrument has been occasioned either by accident, mistake or urgent necessity, the Collector may instead of proceeding under Sections 33 and 40, receive such amount and proceed as per Section 42 – Endorsement of instruments in which duty has been paid under Section/s 35, 40 or 41.

Can a document presented for registration be taken back ?
 Yes. Any document presented for registration may be withdrawn before the process is completed that is before certification.  The parties may also apply for refund of stamp duty and registration charges, where the full stamp duty and 50% of registration charges are refunded depending upon the circumstances. 

What is the stamp duty payable on exchange of properties ?
Exchange of Property is a recognized mode of conveyance of property, where two properties are exchanged with consent. The stamp duty is payable on the market value of the property, whichever is higher, of two properties involved. 
         
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