stamp duty on share certificates in delhi professional opportunity ca. rajat mohan 9910044223

STAMP DUTY

On Share Certificates in Delhi

Professional Opportunity

CA. Rajat Mohan 9910044223

INDEX ACT – Introduction to Stamp Duty on Share Certificates

Procedure 1. Prepare Documents2. Submission of Documents3. Preparation of Duty Chart4. Preparation of Challan5. Payment of Challan6. Deposit of Challan7. Certificate of Stamp Duty paid8. Examples

Procedure for Submission of Stamp Duty after expiry of specified period

Penalty

FAQ’s


ACT


ACT According to Companies Act, 1956,- “Every person whose name is

entered as a member in the register of members shall be entitled to receive share certificate within three months after allotment(or within such other period as the conditions of issue shall provide).”

According to Indian Stamp Act, 1899, the company shall pay the stamp duty within thirty days after the Issue of Share Certificate.

As per Delhi Stamp act, stamp duty shall be paid on “CERTIFICATE OR OTHER DOCUMENT evidence the right or title of the holder thereof, or any other person, either to any shares, one thousand stock in or of any incorporated Co. or other body corporate or to become proprietor of shares, scrip or stock in or of any such Company or body.”


ACT Cont…….

Rate of the said stamp duty shall be “One rupee for every one thousand, or a part thereof, of the value of the shares, scrip or stock including the amount of Premium.”

Penalty shall be 1 to 10 times depending upon the order being passed by department. However penalty can be lower than 1 time as decided by authority.


Procedure


Procedure for Submission of Stamp Duty on time

At the time of issue of shares, Stamp duty shall be paid to the exchequer of government within one month from issue of Share Certificates. Following documents shall be prepared :-

A) Covering Letter (duly affixed Rs 10/- Court Fee Stamp).

B) List of Existing directors.

C) List of shareholders.

D) Brief information of the company (In Standard Format issued by Department).

1. Prepare Documents


E) Certified Copy of Form-2 with Challan.

F) Original Share Certificates.

G) Certified Copy of memorandum & article of association.

H) Rs 10/- as adjudication fee to be deposited with cashier of the department.


A) Covering letter

Date: dd/mm/yyyy ToCollector of Stamps,New Delhi. Dear Sir,

Sub: Stamping of Share Certificates – Name of the Company We are a Private Limited Company having our registered office at

“_______________________________________________________________________________________”. _______ equity shares of Rs. ___/- each were allotted at premium of Rs ___/- each to ____ Allottees in the Board Meeting

held on dd/mm/yyyy as per details given below:

Name of Allottee No. of Shares Distinctive No.Share

Certificate No.

From To

A)

B)

C)


As per Indian Stamp Act, 1899 (2 of 1899) as amended by Indian Stamp (Delhi Second Amendment) Ordinance, 2001, the Share Certificate is required to be stamped @ Re. 1 per thousand of the value of shares. Therefore, in the instant case stamping for Rs. _____/- (being 0.1 % of Rs. _______/- ) has to be got done.

In this connection, we are enclosing herewith the following documents along with Certified Copies of Share Certificates (__ in number):- 1. Certified copy of Memorandum and Articles of Association of the Company.2. Certified copy of Board Resolution3. Photocopy of Share Certificates4. Requisite information w.r.t. shares allotted in the prescribed format. We hope that the above documents are in order to your convenience and perusal and you will be able to issue the necessary order / challan at an early

date.The Company already issued the Share Certificates only after paying the requisite Consolidated Stamp Duty.We authorize ____________ (Chartered Accountant) & ___________ (Office Boy) for submitting the letter for stamping of Share Certificates with the

Collector of Stamps, New Delhi and to do all the acts necessary for getting the Share Certificates stamped in all respects whether herein specified or not, as may be proper and expedient to collect the same.

Yours truly, For ____________________ PVT. LTD. ___________ (Director) Encl: As Above


B) List of Existing Directors

LIST OF DIRECTORS OF THE COMPANY AS ON dd/mm/yyyy

For _________________ PVT. LTD. _______________ (Directors)

DIN/PAN Full NamePresent residential

address Designation Date of Appointment

_____________ _____________ _____________

Director dd/mm/yyyy

_____________ _____________ _____________

Director dd/mm/yyyy


C) List of Share Holders

• List of existing Share Holders should be provided as maintained by the company.

• In case of listed companies this would be very difficult to provide. We advice in such cases list of promoters & directors & there relatives who are shareholders of this company shall be given.


D) Brief information of the company

For _________________________ PVT. LTD. _______________ (Directors)

1 Name and Address of the Company -

2 Brief activity of the company -

3 Status of the CompanyPrivate Company Limited by Shares, Incorporated on dd/mm/yyyy vide CIN No.

4 Date of allotment of shares dd/mm/yyyy

5Reason of allotment of shares on different dates (if applicable)

We advice that instead of filling this part, new letter should be submitted.

6 No. of shares to be issued -

7 Face value of each share Rs. _/-

8Premium to be charged on each share along with return of allotment filled with ROC Rs. _/-

9 Distinctive No. of shares -


E) Form – 2

• Self Attested Following Documents:1. Form – 2 2. Challan of Form – 2 3. Attachment of Form – 2

(a) List of Allottees(b) Board Resolution(C) Any other Attachment, if any

• In case Share Certificates issued are on incorporation of company, then Form – 2 is not needed. Your provided MOA & AOA is sufficient for verification & confirmation of Allotment.

• Sometimes in case of non-availability of Form – 2 , same may be retrieved from website of mca.gov.in. Even then if it is not available then give an affidavit by Directors of the company.


ABC PRIVATE LIMITED (Incorporated under the Companies Act –1956)

Registered office:_________________________________, ________________________

SHARE CERTIFICATE This is to certify that the person(s) named this Certificate is/are the registered Holder(s) of the within-mentioned Share(s) bearing the distinctive number(s)

herein specified in the above Company subject to the Memorandum and Articles of Association of the Company and that the amount endorsed hereon has been paid up on each such shares.

EQUITY SHARES EACH OF Rs. 10 Amount Paid up per share Rs. 10 Regd. Folio No. 00X Certi. No.

00X Name of the shareholder : Mr. XYZ No of shares: XXX (_____________ Only) Distinctive No. From xxx1 To 1 xxx Given under the Common Seal of the Company this dd th mmm , yyyy

Managing Director Director

Secretary/ Authorised Signatory

Note : No transfer of any of the Share(s) comprised in this Certificate will be registered unless accompanied by this Certificate.

F) Share Certificate


G) Memorandum & Article of Association

• Certified Copy of Memorandum of Association & Article of Association is needed with all above documents.

• If there is any change in MOA & AOA then the altered MOA & AOA is needed.


H) Adjudication Fee

• Rs 10/- as adjudication fee to be deposited with cashier of the department.

• Earlier the amount was Rs. 5/- now the amount is increased to Rs. 10/-


2. Submission of Documents

• At the time of issue of shares, Stamp duty shall be paid to the exchequer of government within specified period. Above discussed documents shall be prepared & submitted to Revenue Department (204, B – Block, 5, Sham Nath Marg, Delhi -110054) within One month of Issue of Share Certificates.


3. Preparation of Duty Chart

• Duty Chart is prepared by the department nearly about 15 to 20 days after submission of documents.

• Duty Chart includes Name of the Company , Address of the Company, Face Value of Shares issued, Premium Charged on Shares, Date of Issue, etc.

• Format of Duty Chart is on Next Slide.


OFFICE OF THE DIVISIONAL COMMISSIONER, REVENUE DEPARTMENT, STAMP BRANCH 5, SHAM NATH MARG, DELHI

Sub: F******* payment of Stamp Duty chargeable on Shares/Debentures etc.

Shares have been executed on _______________________________________________ and submit this office for payment of stamp duty on __________________________ i.e. within prescribed time limit (Prescribed time limit is within one month from date of execution).As discussed, notice issued

Submitted please COS (HO)

S.No. Descriptions Remarks

1 File No. & Date F. 10 (____)/COS/HQ/CD

2 Reference No. & Date

F. Audit/Stamp Duty/Shares./10/ Dated :

3 Name of the Company

M/s.

4 Address of the Company

5 Date of allotment of Shares

6 Date of issue of Shares

7 No. Shares

8 Face value of each Shares Rs. Rs. Rs. Rs. Rs. Rs.

9 Premium of each shares if any

Rs. Rs Rs. Rs. Rs. Rs.

10 Distinctive no. of Shares

11 Whether proper stamp duty paid or not?

12 Aggregate amount of Shares including premium

13 Amount of stamp duty

Duty Chart - Format


4. Preparation of Challan

• Challan has been issued by department in Triplicate on the basis of Duty Chart Made.

• The same Challan has to be paid at SBI, Tis Hazari, New Delhi within 5-6 working days for smooth working of your file/case.

• Format of Challan is on Next Slide.


T.R.6(G.A.R.7) Treasury Rule

92

Challan of amount paid into the

STATE/RESERVE

TREASURY/SUB-TREASURY CHALLAN

NO. :

BANK OF INDIA

TO BE FILLED IN BY THE REMITTER

To be filled in by theDepartmental

Officer of the TreasuryBy Name, Full Order to thewhom (&/or) Particulars of banktendered designation the remittance (To be used only in

and address and of the Accounts caseof the authority (if AMOUNT Head of Officer by of remittance

person on any) Account whom to the Bank throughwhose adjustable Departmental

behalf the Rs. P. Officer or themoney is Treasury Officer)

paid

Challan - Format

(In words) Rupees …….………………………………………………………………………………. Date……………………….…... Signature of the Tenderer ………………………….. Received payment (in words) Rupees……………………………………………...……… Treasurer Accountant Date Treasury Officer/Agent

at ………….


5. Payment of Challan

• After the preparation of Challan (in triplicate), you have to make payment of Challan (in triplicate) in Sbi, Tis Hazari, New Delhi within 5 – 6 Working Days, recommended.


6. Deposit of Challan

• After submission of challan, we have to deposit a copy of challan with the revenue department.

• After verification of challan (after 20 days of depositing of challan), department issue a certificate of Stamp duty paid (1 day to 100 days).

• Format of Certificate of Stamp Duty Paid in on Next Slide.


7. Certificate of Stamp Duty PaidGOVERNMENT OF N.C.T OF DELHI

OFFICE OF THE CHIEF CONTROLLINF REVENUE AUTHORITY, DELHIREVENUE DEPARTMENT: STAMP & REGN. BR., R.NO. 204, ‘B’ BLOCK

5-SHAM NATH MARG, DELHI-110054

No.F. 10(____)/COS(HQ)/Con.duty/ Dated:

CERTIFICATE

Certified that ___________________________ Pvt. Ltd. _______________________ _________________ has deposited consolidated stamp duty u/s 9(1)(b) of the Indian Stamp Act, 1899, amounting to Rs. _____ only chargeable under article 19 of schedule 1A of Indian Stamp Act, 1899 @ Rs. 1/- per thousand in respect of issue of _________ equity shares of Rs. ___/- each bearing distinctive no. __ to ______. Aggregate amount come to Rs.___/- The amount of Rs. ___/- has been deposited in State Bank of India, Tis Hazari, Delhi on dd/mm/yyyy vide TR-6 No. _____________ which has been verified by the PAO-VI, Govt. of NCT of Delhi vide No. ____ dated dd/mm/yyyy.

(__________)SDM (HQ-II)/COS/HQ)

Ph. _________To,_____________________ Pvt. Ltd.__________________________________________ CA. Rajat Mohan 9910044223

Face value of Share Capital(A)

Premium Amount(B)

Total Value of Share Capital(C = A+B)

Stamp Duty to be paid (C*0.10%)

Rs. 1 Lac 0 Rs. 1 Lac Rs. 100

Rs. 1 Lac Rs. 9 Lac Rs. 10 Lac Rs. 1,000

Rs. 10 Lac 0 Rs. 10 Lac Rs. 1,000

Rs. 10 Lac Rs. 90 Lac Rs. 1 Crore Rs. 10,000

Rs. 1 Crore 0 Rs. 1 Crore Rs. 10,000

Rs. 1 Crore Rs. 99 Crore Rs. 100 Crore Rs. 10,00,000

8. Examples


Stamp Duty not paid within 30 Days of issue of Certificate


Procedure for Submission of Stamp Duty after expiry of specified period

• The procedure is same as procedure for submission of Stamp Duty on time(as discussed in previous point) but the only difference is that we have to pay penalty i.e. 1 to 10 times depending upon the order being passed by department.

• A notice is being sent by department to the Company if it fails to pay the Stamp duty within Time Limits.

• Format of Notice is on Next Slide.


Notice – Format GOVERNMENT OF NCT OF DELHI

REVENUE DEPARTMENT5-SHAM NATH MARG, DELHI – 110054.

No. F./Audit/Stamp duty/shares/10/**** Dated To,

_______________________ PRIVATE LIMITED________________,________________NEW DELHI.

Sub:- Non-payment of stamp duty chargeable on the issue of shares/debenture/Promissory Note/Debenture-detected by Audit Party. Sir, It has been intimated by Audit Party, AGCR, New Delhi that you have executed/issued below mentioned share certificates

without paying any stamp duty chargeable under the provisions of the Indian Stamp Act, 1899.

You are, therefore, directed to submit Original Share Certificates along with documentary proof with regard to payment of stamp duty chargeable within 7 days of the receipt of this letter positively.

(__________)SDM (HQ-II)/COS/HQ)

Ph. _________

SRN Date (mm/dd/yy) CIN Share_____ ______ ____ _________ ______ ____ ____


Penalty


Penalty (Based on our Experience)

Department has not sent a Notice. You are paying the duty suo-moto

1 Time

• Department sent a Notice. Min. 3 Times


Penalty

Duty is very high( Rs. 50000)Request for penalty lower than 1 Time.


FAQ’s


FAQ’s

Q 1. Is Stamp Duty payable on Shares held in Demat Form & physical Form both?

Ans. Yes, As per SDM, Revenue Department.

Q 2. Is Stamp Duty payable on Transfer of Shares?Ans. There is No Stamp Duty payable on Transfer of Shares.

Q 3. What is the rate of Stamp Duty?Ans. Allotment Before 1st Jan, 2000 – “25 paisa” per certificate.

Allotment After 1st Jan, 2000 – 0.1% of value of Share.

Q 3A. Do we need to deposit duty if 4 certificates were issued before 1 jan 2000?

Ans. Yes, 4*.25= Re 1 is to be paid to department. However department has currently denied to issue any challan for theses petty amounts.On our safer side application shall be submitted.


Q 4. Is this applicable on Private Company , Public Company & Listed Company?

Ans. Yes, As stated by SDM, Revenue Department. However as per our information there are very few listed companies who are paying this duty. This could be a litigative issue.

Q 5. Does this duty applicable on company registered office in Delhi only?

Ans. Companies having registered office in Delhi & the companies having registered office outside delhi but board meeting was held in delhi regarding Issue of Share Certificates are liable to pay Stamp Duty under Delhi Stamp Act.


Q 6. If a company having registered office in Delhi & had Board meeting outside Delhi regarding Issue of Share Certificates, then what is the applicability?

Ans. Legally & technically Speaking, Stamp Duty should be applicable as per the law of that state & No duty is payable under Delhi stamp Act. However this view is not currently accepted by department.

Q 7. Is Stamp Duty applicable on premium also?Ans. Yes, Stamp duty is payable on Face Value including premium.

Q 8. Can Revenue Stamps(Red color Stamps) be attached with the certificate?

Ans. This view is not currently accepted by department & they require the duty should be paid again in this authority.


Q 9. Can duty be paid online?Ans. No

Q 10. Can Challan be deposited at any Bank/Bank Branch?Ans. No, Currently Challans are to be deposited with SBI, Tis Hazari.

Q 11. Stamp Duty is paid at the time of increase in share capital on website MCA.GOV.IN is it required to be pay again?

Ans. Yes. That stamp Duty is on Increase of Share Capital & not on Share Certificates.

Q 12. If company Issued original share certificate then what they have to submit? Ans. We advice that Original Share Certificates shall not be submitted in any case.

Submit Photocopy as attested by director.

Q 13. Is there any list of Defaulters?Ans. Yes, based upon the data available on MCA a list has been prepared.


Q 14. Is duty payable if shares issued are Bonus Shares from Security Premium & Profit & Loss Account?

Ans. Yes, in both case.

Q 15. If Shares issued on discounted value then Stamp duty is payable on Face value or Discounted Value?

Ans. Stamp Duty is payable on Discounted Value.

Q 16. If company want to minimize the penalty imposed by Collector of Stamp Duty or want to file case against the department, then before which authority appeal would be filed?

Ans. The appeal can be filed before Chief Controlling Revenue Authority (CCRA), Board of Revenue (5, Sham Nath Marg, Delhi -110054).

Q 17. If company didn’t pay penalty after receiving notice from department then what are the actions taken by department?

Ans. If Stamp Duty is not paid by the company after receiving Notice then department issues a 2nd Notice nearly after 1 year of 1st Notice. If company didn’t report to department within 15 days of issue of Notice then Department issues 3rd Notice to company for Compounding with 10 times penalty. There is no prosecution under Indian Stamp Act but Collector of Stamp Duty & Chief Controlling Revenue Authority (CCRA) may pass order for prosecution depending upon the case.


Q 18. What are the no. of visits for getting Stamping done with department?

Ans. You have to visit min. 8 times if your case is of penalty i.e.(a) Submission of documents.(b) For taking date of Hearing.(c) For Hearing of Your case.(d) For taking challan.(e) For Deposit of challan at Sbi, Tis Hazari.(f) For submission of copy of Challan to department.(g) For Verification of Challan.(h) For taking Certificate of Stamping.


Thank You all

- CA. Rajat Mohan Contact No: 9910044223 Email: [email protected]. Rajat Mohan 9910044223

stamp duty on share certificates in delhi professional opportunity ca. rajat mohan 9910044223

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