ARTICLE
15 August 2025

Stamp Duty Updates On Sale Deed And Issuance Of Shares

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In a significant judgment bringing clarity and reaffirmation to the established position of stamping in real estate transactions in the State of Punjab, the Punjab and Haryana High Court ("PHC"),
India Corporate/Commercial Law

I. Stamp Duty to be computed basis the market value of the property at the time of execution of Sale Deed: Punjab and Haryana High Court

In a significant judgment bringing clarity and reaffirmation to the established position of stamping in real estate transactions in the State of Punjab, the Punjab and Haryana High Court ("PHC"), in a recent matter of Uggar Singh v. State of Punjab (2025: PHHC:084414-DB), has held that the stamp duty payable on a conveyance or sale deed must be calculated based on the market value of the property at the time of execution of sale deed and not when the parties entered into the agreement to sell.

Legal Issue

The matter was placed before a Division Bench for adjudication on the issue whether the stamp duty should be computed basis the valuation of the property at the time of execution of sale deed or when the parties entered into an agreement to sell?

Legal Framework, Judicial Analysis and Decision

After analysing the relevant provisions of the Indian Stamp Act, 1899, as amended by the State of Punjab, the PHC emphasised that under Section 3 of the Act the stamp duty is levied on the instrument (i.e., the conveyance or sale deed), and not on the transaction. Section 17 of the Act requires that instruments chargeable with duty must be stamped before or at the time of execution.

The PHC relied on the Supreme Court's decision in State of Rajasthan v. Khandaka Jain Jewellers (2007) 14 SCC 339 wherein the Apex Court held that the relevant date for determining stamp duty is the date of execution of the sale deed, not the date of the agreement to sell. The PHC also referred to other relevant judgments, including State of Haryana v. Manoj Kumar (2010) and Shanti Bhushan v. State of UP (2023), both of which reinforced the principle that stamp duty is to be assessed on the market value prevailing at the time of execution of the conveyance.

Based on the above analysis, the PHC Court held:

"For the purpose of determining the amount of stamp duty on conveyance deed/sale deed, the market rate prevailing at the time of execution of sale deed would be relevant and not when the parties entered into agreement to sell."

This decision reaffirms that any escalation in market value between the agreement to sell and the execution of the sale deed must be considered for the purposes of payment of the applicable stamp duty. The Court reaffirmed that chargeability attaches to the instrument rather than the underlying transaction, reinforcing that the sale deed execution date and not the date of the agreement to sell, is the relevant date for the stamp duty calculation based on the prevailing market rate.

II. Delhi Revenue Department Clarifies Stamp Duty Rate on Issuance of Shares

On July 29, 2025, the Revenue Department ("Revenue Department") of the National Capital Territory of Delhi ("NCT") issued a circular clarifying the applicable stamp duty rate for the issuance of shares by companies having their registered office in the NCT of Delhi. The clarification emphasises the territorial specificity of the rate and its precedence over the general rate prescribed under the Finance Act, 2019.

Description of the Circular

The Revenue Department, vide the Circular dated July 29, 2025, has prescribed that:

  1. The stamp duty shall be payable at the rate of 0.1% of the value of shares upon their issuance under Article 19 of Schedule IA of the Indian Stamp Act, 1899 (as applicable to the NCT of Delhi) ("Act").
  2. The rate of stamp duty applies to all companies, whether listed or unlisted, having their registered office in the NCT of Delhi.
  3. All the companies (listed or unlisted) are directed to apply for adjudication of stamp duty for the issuance of shares under Article 19 of Schedule IA of the Act, regardless of whether the share certificates or documents are executed in physical or dematerialised/digital form, within the timelines prescribed by the Act. Failure to comply may attract penalties under the relevant provisions of the Act.

Separately, the Circular clarifies that the 0.1% stamp duty applies solely to the issuance of shares and does not extend to certificates or other documents evidencing the right or title to shares, scrip, or stock in any incorporated company in the NCT of Delhi.

Going forward, companies with their registered offices in the NCT of Delhi must ensure compliance with the clarified stamp duty rate of 0.1% on the issuance of shares. This requirement applies to both listed and unlisted companies, irrespective of whether the shares are issued in physical or dematerialised form.

LexCounsel provides this e-update on a complimentary basis solely for informational purposes. It is not intended to constitute, and should not be taken as, legal advice, or a communication intended to solicit or establish any attorney-client relationship between LexCounsel and the reader(s). LexCounsel shall not have any obligations or liabilities towards any acts or omission of any reader(s) consequent to any information contained in this e-newsletter. The readers are advised to consult competent professionals in their own judgment before acting on the basis of any information provided hereby.

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