The Importance Of Stamping The Right Way
The stamp duty is a kind of tax which is paid for the transactions performed by way of document or instrument under the provisions of the Stamp Act of the states and the Indian Stamp Act. It is important to note here that the stamp duty is payable on the instruments and not on the transactions. The purview of the meaning of the terms “Instruments” and “Documents” is very wide. An instrument means any document by which any right or liability is or purports to be created , transferred, limited, extended, extinguished or recorded. And a document is, under the Evidence Act, any matter expressed or described upon substance by means of letters, figures or marks or by more than any of those means and intended to be used or which may be used for the purpose of recording that matter.
The importance of proper stamping of instruments or documents lies in the fact that such instruments or documents in order to be legally tenable and maintainable before the courts of law as evidence, should properly stamped failing which these may not be admitted in evidence. Another important to be kept in mind in this regard is the proper execution of the instrument. which ,in effect, means putting signatures on the instruments by the person or persons executing them.
A stamp duty can be paid by using stamp paper or by using adhesive stamps by means of franking. The liability for payment of stamp duty is generally mentioned in the agreement entered into between the parties. In the absence of any agreement it has to be paid by the executing parties.
The documents like Bills of Exchange, Cheques, Promissory Notes, Bills of Lading, Letters of Credit, Policies of Insurance, Transfer of Shares, Debentures and Proxies and Receipts are required to stamped as per the provisions of the Indian Stamp Act to be valid and enforceable in the court of law. Adhesive Revenues Stamps are affixed on Demand Promissory Notes, Acknowledgements, Balance confirmation Receipts etc. Special Adhesive stamps or impressed or embossed stamps are used on printed forms like Hypothecation Deed, Pledge agreement , Letter of Guarantee etc.
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