How Is New Indian Stamp Bill, 2023 Different From India Stamp Act, 1899?

The Centre on January 17 released the draft ‘Indian Stamp Bill, 2023’ and invited suggestions from public within a period of 30 days on the same. Here are 10 key changes proposed by the new Bill

The Department of Revenue, Ministry of Finance, Government of India, has prepared a draft ‘Indian Stamp Bill, 2023’ to align it with modern stamp duty regime.

Source : PTI

The Centre has proposed to replace the existing India Stamp Act, 1899 with new Indian Stamp Bill, 2023. The Centre on January 17, as a part of pre-legislative consultative process, released the draft ‘Indian Stamp Bill, 2023’ and invited suggestions from public in a prescribed proforma within a period of 30 days.

The Department of Revenue, Ministry of Finance, Government of India, has prepared a draft ‘Indian Stamp Bill, 2023’ to align it with modern stamp duty regime.

The said bill is expected to pave way for a modern stamp duty regime primarily by bringing in provisions for “digital e-stamping”. The proposed Bill is expected to facilitate ease of doing business by removing the colonial law and increase government's revenue.

What is stamp duty?

A stamp duty falls in the category of direct tax that the government collects on all documented financial transactions including letter of credit, sale and purchase of shares, insurance policies and property transactions. The Stamp Duty is an admissible evidence across all courts and is collected by both Centre and State governments.

The Indian Stamp Act, 1899 is a fiscal statute laying down the law relating to tax levied in the form of stamps on instruments recording transactions. Stamp duties are levied by the Centre, but within the States are collected and appropriated by the concerned States in terms of provisions of Article 268 of the Constitution. 

How is new law different from existing law?

The existing stamp duty law was enacted in pre-colonial times. The law was amended from time to time, but it still does not accommodate new financial instruments for transactions and features like digital signatures and e-stamping.

However, the new draft bill has a well-defined provision for electronic stamps, digital signature and a framework for digital record. Here are 10 key changes proposed by the new Bill:

1) The Bill also provides for a more expansive definition of financial instruments. 

2) The Bill also has provisions to empowers the states and the Centre to introduce new instruments for levy of stamp duty from time to time. 

3) The bill proposes withdrawal of duty exemption for ships and vessels. 

4) The draft bill has a provision to revise the way market value is determined in case of lease for transfer of property rights and mining lease.

5) The new bill also provides for a simplified stamp duty in case of special economic zones (SEZs), and also lists exemptions and calculation of valuation. 

6) As the Article 370 providing for special treatment for Jammu and Kashmir has been abrogated, the new bill also talks about revision of stamp duty regime the state.

7) The bill has increased the monetary threshold for issuing revenue receipt to Rs 1,000 from Rs 20. 

8) Collector's application fee has also been enhanced to Rs 1,000 which was previously just Rs 5, in the draft bill.

9) The bill proposed to raise the the penalty amount from Rs 5000 to Rs 25,000 for not paying Stamp Duty.

10) The proposed bill also has provisions to check if properties are undervalued. It also seeks to remove the time limit of the enquiry.