stamp duty

Stamp duty is levied on instruments, not on transactions. Rates on most instruments are fixed by the States (in Karnataka under the Karnataka Stamp Act, 1957), while the Union fixes rates on some instruments such as bills of exchange and cheques (Indian Stamp Act, 1899). Duty is usually a percentage of the market value or consideration.

An instrument that is not duly stamped is not admissible in evidence for any purpose until the deficit duty and penalty are paid (s.35, Indian Stamp Act; s.34, Karnataka Stamp Act). In 2023 a seven-judge bench held that non-stamping makes an instrument inadmissible but not void, and that the defect is curable; an arbitration clause in an unstamped agreement is therefore not invalid.

Example

The unstamped lease deed could not be admitted in evidence until the party paid the deficit stamp duty and penalty.

In Indian law

• Section 35, Indian Stamp Act, 1899; Karnataka Stamp Act, 1957
• In re: Interplay between Arbitration Agreements and the Indian Stamp Act, 2023 INSC 1066: unstamped instruments are inadmissible, not void; the defect is curable

See also

registration · instrument · conveyance

Read more in the study notes

• Reasoned decisions, exceptions to natural justice, effect of breach and Article 136 (Administrative Law)
• Lok Adalats and Permanent Lok Adalats (Alternative Dispute Resolution Systems)
• Arbitration agreement and its drafting (Alternative Dispute Resolution Systems)
• Negotiable instruments: meaning, characteristics, promissory note, bill of exchange and cheque (Banking Law)
• Holder and holder in due course, parties to instruments, their liability and payment in due course (Banking Law)
• Negotiation, endorsement, assignment and presentment (Banking Law)