IndexHistory of Stamp DutyStamp Act and Real PropertyPosition under the Indian Stamp ActConclusionHistory of Stamp DutyIn any negotiated transaction, one of the key elements that are part of the negotiations is who would pay government taxes and duties for the transaction, and this is particularly true for transactions involving immovable property where stamp duty constitutes a substantial component of the entire consideration amount. If we want to try to define stamp duty, we can define it as a tax levied on legal documents relating to transactions such as the transfer of property. Say no to plagiarism. Get a tailor-made essay on "Why Violent Video Games Shouldn't Be Banned"? Get an original essay Stamp duty, in the form of a tax that we see in the modern world, originated in Spain in the early 1600s. From there, over the next century, it spread to countries such as Denmark, England, France, Prussia and the Netherlands and it gradually spread to the rest of the world through the imperial routes of colonization and trade. A great example of this is the introduction of the Stamp Duty in America, when the British Parliament passed the Stamp Act in 1765. This tax was imposed on all forms of printed paper, from newspapers to licenses and any other form of legal document. At the time, the revenue raised from this imposition of stamp duty was used to finance British troops positioned in America. In addition to this, the revenue collected was also used to pay the salaries of British officials who were positioned in America on administrative duties. Over time, various specialized laws have evolved, each providing a complete and comprehensive set of rules regarding the transaction. it regulates from the inception of the contract how disputes must be resolved, if and when they arise. In such a specialized legislative environment, the applicability of generalist one-size-fits-all concepts, such as stamp duty, has become slightly archaic and limited in application. However, given the importance of these rules, they are still preserved in some transactions, and a prime example of this are transactions involving the transfer of real estate. When approaching the concept of issues such as stamp duty, the first question that arises is what is the rationale behind the imposition and, more importantly, the payment of stamp duty? If we have to look at the transactions on which this tax is levied, it can be seen that most of these transactions are between two private parties, where there is some form of transfer of ownership, temporary or permanent, from one party to another, which may include the transfer or retention of physical possession and easements accompanying the property. Therefore, the question arises: when the two parties, regulated by law, enter into a transaction and any profit made by one of the parties through such transaction would be taxed separately, why is it necessary for private individuals to pay additional tax just to carry out the operation which would involve the transfer of title from one party to another. The answer to this question can also be found in history books. If we look at the history of tax regimes that have evolved around the world, it can be seen that when the concept of stamp duty was created and applied, tax regimes in most jurisdictions were very primitive and highly limited. Furthermore, in the early 1600s, the concept of “tax” was still seen as something that was paid by the common man to the state, and in some cases even to the church. It was seen as the oppressive technique of robbing thecommon people of their money in the name of the state while those like the clergy and nobles walked away unscathed. Therefore, a universally applicable system was needed based on the transaction and not on the parties involved in the transaction. Furthermore, it was also the time when most European colonizers began to massacre the world with centuries of warfare, and thus needed additional income to support their fleets. Furthermore, tax systems in those days were not as sophisticated as today and therefore a universal concept of stamp duty was created which would act as a form of tax on any type of transaction entered into by two parties. If we want to look at the history of stamp duty in India, we must look at the Indian Stamp Act of 1899 which was passed by the British Parliament while India was still a colony. The provisions of this law were quite comprehensive and included all types of transactions that could be entered into and the form of duties that could be imposed on such transactions. For example, this law provided for the tax regime that would be implemented on transactions such as insurance, especially marine insurance since ships were used as the primary transportation of intercontinental trade. Furthermore, this law also provided regimes on transactions involving bonds and securities, as well as transactions involving the transfer of immovable property. Even though this law is more than 100 years old, it is still applicable today. However, the act, with the passage of time, has evolved to facilitate transactions involving today. One of the salient features of this is the introduction of stamp paper under the Stamp Act wherein. Stamp paper is a document issued by the government which has a fixed value and the value of the stamp paper is assumed to be the stamp duty paid on the transaction made on that stamp paper. While there is central legislation on the subject in the form of the Indian Stamp Act, 1899, the point of imposition of stamp duties comes under the jurisdiction of the states and hence the states can pass their own specialized legislations on this subject. In the state of Maharashtra, this comes in the form of the Maharashtra Stamp Act. Originally passed as the Bombay Stamp Act in 1958, it repealed the applicability of the Indian Stamp Act in the jurisdiction falling under this Act. Stamp Act and Real Estate As seen in the previous section, in modern times, the relevance of the Stamp Act is mostly limited to transactions involving the transfer of real estate. Chapter II of the Maharashtra Stamp Act mainly covers most of the provisions relating to imposition of stamp duty. While part A of the law (Ss. 3-9) deals with the instruments on which this obligation could arise, part B (Ss. 10-16) deals with stamps and the methods of their use. In Part A, the law provides a distinction between the instruments that would be used in various types of transactions and the stamp duty that would be levied on each of them. In these, Section 4 specifically provides for the tax that would be imposed on different instruments used in a single transaction of development, sale, lease, mortgage or settlement agreement. Section 4: (1) Where, in the case of a development agreement, sale, lease, mortgage or transaction, several instruments are used to complete the transaction, only the principal instrument shall be subject to the tax prescribed in Schedule I for transfer, development agreement, lease, mortgage or transaction, and each of the other instruments shall be taxable with a duty of one hundred rupees in lieu of the duty (if any) prescribed in such Schedule. (2) The partiesmay themselves determine which of the instruments so used shall, for the purposes of subsection (1), be deemed to be the principal instrument. (3) If the parties are unable to determine between themselves the principal instrument, then the officer before whom the instrument is produced may, for the purposes of this section, determine the principal instrument provided that the tax chargeable on the instrument so determined shall be the highest tax that would be chargeable in respect of any of the said instruments used. As seen from this section, there are multiple documents that are part of the transaction and each of these documents carries a separate obligation at the time of execution. The importance of stamp duty is that it provides legal support and enforceability to a document. If we look at Schedule I, it provides a long list of types of documents used in property transfer transactions and the stamp duty applicable on them based on criteria such as the type and size of the property that is the subject of the transfer , the type of instrument and the value of the operation itself. Coming to Part B of Chapter II, the type of revenue stamps that can be used and the operations in which each of these revenue stamps finds its application are foreseen. The issue of paying stamp duty is also addressed. While Article 10 provides a general description of the payment methods, Article 10A contains special provisions for institutional bodies such as government agencies, banks and insurance companies, requiring institutions under the section to pay the tax of stamp duty only in cash or in cash form of application drafts. Covenant C of Chapter II running from Section 17 to Section 19 provides for the time in a transaction when stamp duty is to be paid for that particular transaction. In this, a distinction is made between Article 17 and Article 18 based on the place where the act is executed against. Section 17 provides for the time at which stamp duty is to be paid when the instrument is executed within the State, while section 18 provides for the time at which stamp duty is to be paid when the instrument is executed performed outside the state. Section 19 contains a special provision providing for the creation of a special class of instruments which would attract higher duty in the State of Maharashtra. Part D, which runs from Section 20 to Section 29, covers one of the most crucial aspects of this law, which is the assessment of the duty that would be applicable on a transaction. While the initial sections of this part deal with such matters as the conversion of amounts into foreign currencies (Sec. 20), the valuation of shares and marketable securities (Sec. 21) and the effect of the declaration of the exchange rate or average price ( Section 22) the second half of the chapter deals with the way in which the tax on the transaction must be assessed, be it in the case of an annuity (section 26), or how transfers for consideration or subject to payments must be assessed futures, etc. charged (Sec. 25). Article 27 specifically provides for the methods of collecting the tax on instruments whose object cannot be determined in the categorical matrix provided by law. Furthermore, Section 28 contains provisions on the facts to be established in the act affecting the application of duty on them, while Section 29 provides directions relating to duty in case of certain transportation. Part E is the final part of Chapter II of the law and contains the most important provisions from the point of view of the parties, i.e. who has to pay the stamp duty. While Section 30 provides guidelines for determining who should pay stamp duty, Section 31 makes specific provisions regarding the payment of stamp duty by.