Payment of Stamp Duty on Commercial Agreements

[Sandesh Kasabe]

Dear Sir,

Firstly, Wishing you a happy new year 2017 in advance. My query is that in case of Agreements between two Corporates for providing certain services where one Company who is receiving the services is in Mumbai and other is in Hyderabad where it has its corporate office, in such case where should the stamp duty be paid for printing the agreement on stamp paper.

1) Should it be Mumbai for receiving services in Mumbai but payment made to Hyderabad?
2) Should it be Hyderabad if agreement is made in Hyderabad but signed in Hyderabad and Mumbai.
3) In case place of Arbitration or Jurisdiction of Court is designated to Kolkata i.e. a third location, where should be the stamp paper purchased. Should it not be Kolkata so that the Agreement can be admissible in that Court as there may be technical objection on non payment of stamp duty in Kolkata.

One more thing, services mentioned above would be normal consultancy services, Security and housekeeping services etc. which may not attract stamp duty but it is usually printed on 100 Rs. Stamp paper or in case there is an indemnity clause then may be Rs. 500/- as per Bompaby Stamp Act.

Request to kindly enlighten on the above. Also if you have any other scenarios, pls advise on them too.

[Dr. Ashok Dhamija]

Normally, for such type of agreement, the stamp duty is to be paid to the State (as it is covered within the legislative powers of the state).

You may have to check the Stamp Acts of the concerned states, but, to the best of my knowledge, generally speaking it may have to be paid in the state in which the services are to be rendered. This is so because, for example, Section 3 of the Maharashtra Stamp Act, makes the following instruments charges with stamp duty (other states, generally, have similar provisions):

(1) every instrument which is executed in Maharashtra;
(2) every instrument which is executed out of Maharashtra, but which relates to any property situate or to any matter or thing done or to be done in Maharashtra.

In your question, it appears that the services would be rendered in Maharashtra, so it would be advisable to pay the stamp duty in Maharashtra, since it may be covered within the expression “to any matter or thing done or to be done”.

Maharashtra Stamp Act is available at this link: http://igrmaharashtra.gov.in/SB_PUBLICATION/DATA/acts/Maharshtra%20Stamp%20Act%2011.9.2014.pdf

With regard to your second question, you may have to examine the relevant Stamp Act to ascertain whether any specific stamp duty is payable or the general stamp paper of Rs. 100 would be sufficient. In fact, general stamp paper of an amount such as Rs. 100 (which may vary from state to state) is also basically stamp duty, but it is standardized rate for all sundry agreements for which no specific stamp duty is specified. Therefore, it is advisable to examine specific clauses in the Schedule to the relevant Stamp Act whether specific stamp duty for specific instruments is mentioned.     

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Dr. Ashok Dhamija is a New Delhi based Supreme Court Advocate and author of law books. Read more about him by clicking here. List of his Forum Replies. List of his other articles. List of his Quora Answers. List of his YouTube Videos.

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