Key changes proposed in the stamp act are

Dear Professional Colleagues, Key changes proposed in the stamp act are:Exclusion in 'bond': 'debenture' is now excluded from the definition of 'bonds'. This amendment will now help in clarifying for various stamp duty adjudications / litigations wherein the adjudicating authority used to charge them interchangeably basis the terms of the 'debentures'. With this amendment, 'debentures' will now be charged only under Art. 27 (which is a part of the Union list).  Definition of 'debenture': the term 'debenture' is now separately defined under stamp act and covers most of the instruments which are used in transaction structuring like:bonds or any other instrument of a company evidencing a debt whether constituting a charge or not (this will open up a pandora box for various loan instruments used by banks / NBFCs)bonds in the nature of 'debenture';certificate of deposit;securitized debt instrument;certificate of deposit, commercial usance bill, commercial paper and such other debt instrument of original or initial maturity upto 1 year as RBI may specify from time to timeand any other debt instrument specified by SEBIDefinition of 'marketable security': The definition is now rationalised. The new definition proposes that the security has to be capable of being 'traded' on any stock exchange, unlike earlier definition where the security has to be capable of being 'sold'. Further, the term 'stock exchange' is also defined and thus the ambiguity of how to define a stock exchange under a fiscal statute is also clarified.Definition of 'market value':to mean: for securities traded in a stock exchange - the price at which it is traded; securities transferred through depositories but not traded in stock exchange - price / consideration mentioned in the instrument; security dealt otherwise than in stock exchange or depository - price or consideration mentioned in the instrument.Consolidation of stamp laws: it is proposed to consolidate the stamp duty provisions relating to issue, sale or transfer of securities under the newly inserted Section 9A of the Indian Stamp Act. The challenge one may apprehend in this case is that Entry 91 of List 1 of Seventh Schedule of Constitution of India empowers the central government to cover only a certain instruments viz. bills of exchange, cheques, promissory notes, bills of lading, letters of credit, policies of insurance, transfer of shares, debentures, proxies and receipts. So even if the government makes changes (under this budget) in issuance of shares or sale of debentures, the same will actually impact the stampability of the respective instruments when the state governments also amends their respective state schedules / acts and follow the central amendments. Stamp duty on transfer: transferability of demat securities between beneficial owners was earlier exempted from stamp duty u/s 8A(c)(ii) & (iii). The same is now deleted and now the exemption is only limited to transfer of securities from a person to a depository or from a depository to a beneficial owner. The rates at which stamp duty is chargeable on transfers are: in case of transfer and re-issue of debentures @0.0001%in case of transfer of security (other than debenture) on delivery basis @ 0.015%in case of transfer of security (other than debenture) on non-delivery basis @0.003%Centralised collection: a new Section 9A is inserted wherein stamp duty paid on any of the following instances will now be collected on behalf of the state government and they will then transfer the said stamp duty within three weeks of the end of each month to the state government.  stamp duty on sale of any securities made through a stock exchange - by the stock exchange or a clearing corporation appointed by it;stamp duty on transfer of securities for a consideration made by a depository otherwise than on the basis of any transaction referred to above - by the depository;stamp duty on issue of securities, any creation or change in the records of depository is made - by the depository

the stock exchange (or the clearing corporation appointed by it) / depository shall transfer the said stamp duty to the respective state government within three weeks of the end of each month. The central government shall make rules in this regard

Stamp duty on issuance: issuance shall be charged as under:issuance of debentures @0.005% (currently the issuance is charged @0.05% per year upto a maximum of 0.25% or Rs. 25 lacs whichever is lower)issuance of security (other than debenture) @0.005% (currently the issuance is charged as per state schedule which is generally @0.1%)derivatives futures @ 0.002%options @0.003%currency & interest rate derivatives @0.0001%other derivatives @0.002%government securities @0%repo on corporate bonds @0.00001%Stamp duty payable by: stamp duty shall be paid by:in case of sale of security through stock exchange - by the buyerin case of sale of security otherwise than through a stock exchange - by the sellerin case of transfer of security through a depository - by the transferorin case of transfer of security otherwise than through a stock exchange or depository - by the transferorin case of issue of security whether through a stock exchange or depository or otherwise - by the issuerin any other case - by person making, drawing or executing such instrumentExemption for 'debentures': In case of debentures the exemptions the caveat under Article 27 for 'debenture' re 'marketable security' is deleted. In other words earlier 'debenture' which were 'maketable' were subject to stamp duty under article 27. Now every 'debenture' (defined under newly inserted section 2(10A)) is subject to stamp duty. Further, the exemption of mortgage deed is also deleted. So even if the debentures are issued pursuant to mortgage deed which is already stamped, the debentures will also be required to be separately stamped under article 27. Regards: Jaiswal Amrish & AssociatesJaiswal Amrish M.COM , B.COM, Certified Accounting Techniciane (CAT-II) (Nirc-Icwai Bhawan,New DelhiIndia), DSC RA E-MUDRA

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