What is Stamp Paper, Judicial & Non Judicial Stamp Paper?
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The stamp paper looks like a foolscap size blank paper. It is found printed with revenue stamp as seen imprinted in currency notes or on postal stamps of notified value such as Rs.10, Rs.20, Rs.50, Rs.100, Rs.500 and even more, and is issued by the Government across the world.
Every stamp paper carries a monetary value, but neither it is a negotiable instrument nor it can be exchanged like currency notes. These papers are used for endorsing authenticity to official agreements and documents. Almost all documents / agreements with legal implications including transactions like Lease Agreement, Buying and Selling of Property, Business / Contract Agreements, Loan Agreements / Financial Deals, Power of Attorney, Affidavits, Articles of Association, Memorandum of Association, Indemnity Bond, Declaration, Mortgage, Gift Deed, etc. are executed on stamp papers to make them legitimate and legally enforceable.
Regardless you are documenting daily business transaction or you are going to execute an agreement for some upcoming projects, etc., you need to use a Stamp Paper. Irrespective of the modus operandi of an agreement in order to make it legally valid, a stamp paper has to be used to add legal sanction to this agreement done.
Uses of Stamp Paper
Stamp papers have been widely used around the world to collect taxes on various documents. The papers are always bought blank and are available from licensed stamp vendors, post offices, Government Treasury offices and courts according to local regulations. The concerned persons then write their mutual terms of contract on the paper and lodge it with the court or concerned authority for legal validation.
This is an efficient as well as legal way of collecting taxes by government. This is a passive way to get stamping documents legalized and authenticated without the obligation of submitting them to a responsible and authorized government authority.
Stamp papers have been in use in many countries; however, electronic versions are being developed in order to increase ease of doing business and also to reduce the risk of fraud. The stamp papers are an important source of income for many developing countries. It is reported that in some countries it is difficult to collect direct taxes and in those cases stamp duty is a good source of revenue. Bangladesh is one of these countries that collect major quantity of tax revenue from stamp duty.
So, before we discuss further let us understand, What Stamp Duty is?
Stamp Duty is the tax levied on the legal acknowledgement of documents. According to the law, it is mandatory to pay stamp duty to the Central/State Government when certain transactions takes place.
The value of stamp duty is either fixed or it may vary with the value of property/instrument under question. All states have different laws and prescribe the amount of stamp duty to be paid for a particular transaction which will vary from one state to another state. In India the Indian Stamp Act, 1899, is applicable for states, which do not have their own Stamp Act.
Types of Stamps
There are commonly two types of stamp papers, and these are:
01. Judicial stamp papers
02. Non-judicial stamp papers
01. Judicial Stamp Paper
Generally, judicial stamp papers are used for a legal purpose or for proceeding with court cases or for continuing legal procedures. These stamp papers are also known as court fee stamp papers. The judicial stamp papers are used for payment of court fee in the court to avoid cash transactions. A case may not be admitted by the court without the payment of court fees.
02. Non-Judicial Stamp Paper
Non-judicial stamp papers are generally used for documents like Power of Attorney, sale deed, rent agreement, affidavits, transfer of immovable property like building, land, mortgage or other important agreements, affidavits, loan security, etc.
The stamps are used as per the rates determined by the government for recovery of the stamp duty. At present the non-judicial stamp papers of value Rs.5, Rs.10, Rs.20, Rs.50, Rs.100, Rs.500, Rs.1000, Rs.5000, Rs.10000, Rs.15000, Rs.20000 and Rs.25000 are available.
At the time of paying stamp duty, you have to be sure about the required value of stamp duty to be paid for a certain transaction. Without ascertaining the leviable dues, you should not buy stamp paper or stamps or go for franking or E-stamping as either you may overpay and if you less stamp, you may remain liable for penalty.
Also Read: Procedure for Registration of Property
How to Buy Stamp Papers?
There are three different ways of paying stamp duty or fulfilling the formality of buying stamp papers for paying scheduled stamp revenue. These are:
01. Buying Stamp Papers
- Traditional Stamp Papers
- E-Stamp Papers
03. Adhesive Stamps
In all these ways, you can pay stamp duty to the government to make a document legally enforceable.
Nowadays, instead of purchasing stamp paper from the authorized stamp vendors, one can also use E-stamps. E-stamping is a computer-based arrangement and it is more secured in terms of paying non-judicial stamp duty to the government concerned. The prevailing physical stamp paper is fast getting replaced by E-stamping. The E-stamping bears unique Identification Number too for authenticate every dealing done on these papers.
The value of a stamp is to be used in prescribed format under the instruction of law and it will vary from one transaction to another depending on its sale/deed value also. The document may not remain enforceable and either it may become invalid or you might have to pay penalty under the stamp act.
The Stamp papers have to be purchased in the name of one of the parties involved in the contract / transaction.
It is also advisable to buy stamp papers from authentic stamp vendors only, who are authorized by Government.
With regard to the non-postal stamp types and its use as stated herein there are different types of stamps and dealings stated against it.
Non-Judicial Stamp Paper
01. E-Stamp Papers and Traditional Stamp Papers
E-Stamp papers and traditional stamp papers are also non-judicial stamp papers. E-stamping is a computer based application and E-Stamps are available in certain banks and co-operative societies only. We have to buy an E stamp to write the contract/agreement on it.
E-stamping is getting popular every day for its convenience and complete transparency. All the State Government are introducing the facility of ‘E-Stamping’ through the Stock Holding Corporation of India Ltd. Mostly, this facility is available in the states in all the districts and Block Head Quarters at the office of the Sub-Registrar. Hence the person going for registration of the document will have the option of availing the facility of paying the duty at site. Thus the E-stamping certificate is made available immediately.
Details You May Need While Buying Stamp Paper:
Normally you need the following details to buy a stamp paper-
- First Party Name
- Second Party Name
- Address of both the parties
- Document Name
- Stamp Paper Value
Details Included In E-Stamp Paper:
- Certificate No
- Certificate issued date
- Account reference
- Unique Doc Reference
- Name of the e-stamp purchaser
- Description of document
- Consideration price
- Name of the First Party
- Name of the Second Party
- Name of the Stamp Duty Payer
- Stamp Duty paid
Franking is a technique of printing a mark on a document indicating that the stamp duty for the transaction is already paid. Franking machines are installed in many Sub-Registrar offices. After the receipt of the requisite stamp duty, the authorized officer franks the document and returns it to the applicant authorizing the receipt of the money.
You may not have the availability of franking facility nearby for validating your document because it is not that random available till now. In that case, you always have the option of buying the traditional stamp papers for remitting the stamp duty.
Moreover, if there is any demand of the same by the banks as well as by the loan granting private company etc. then special adhesive stamps franking license are available. This facility has already earned huge popularity in the State Gujarat, and slowly getting popular nationwide.
Special Adhesive Stamps of Value
03. Adhesive Stamps
Adhesive stamps are convenient labels that can be pasted on documents as the emblem of already paid stamp duty. They are adhesive stamps like postal stamps but cannot be used on legal documents. So be aware before using these stamps: unless you are sure about their acceptability, you may land into the hassle of bad expense.
The Easy Way to Get Stamp Papers:
Now, facilities are also available whereby you can buy stamp papers online, without stepping out of your house. There are vendors also who can provide you stamp papers if you need them in bulk.
Rs.1 | Rs.2 | Rs.5 | Rs.10 | Rs.20 | Rs.50 | Rs.100 | Rs.500 | Rs.1000 and Rs.5000 are available.
(a) Notary Stamps:
Before making the use for affidavit, Power of Attorney like documents has to be notarized by the Executive Magistrate or by a government appointed Notary. The Notarial stamps are available of Rs. 5/- value. This value may change from time to time.
(b) Revenue Stamps:
All over the nation transactions of more than Rs. 5000/- need to be signed on Revenue Stamp. The revenue stamp of Rs. 1 value is available. The Revenue Stamps are available from the Post-Offices.
(c) Agreement Stamps:
At the time of marriage registration, or for all other agreements, stamps as determined by the government has to be affixed and recovered.
(d) Insurance Stamps:
The Insurance Companies sell the policy on which the insurance stamp is used. Insurance stamps are available of the values like Rs.1 | Rs.2 | Rs.5 | Rs.10 | Rs.20 | Rs.50 | Rs.100 | Rs.500 | Rs.1000, respectively.
(e) Share Transfer Stamps:
At the time of sale or purchase of shares the use of the share transfer stamps is made. Share transfer stamps are available with a range of values like Rs.1 | Rs.2 | Rs.5 | Rs.10 | Rs.50 | Rs.100 and Rs.200.
(f) Foreign Bill Stamps:
At the time of execution of dealings of the private companies with the foreign companies, the Foreign Bill Stamps are necessary. The said stamps of value
Rs.1 | Rs.2 | Rs.5 | Rs.10 | Rs.50 and Rs.100 are available for purchase.
(g) Hundi Papers:
In the previous times in the promissory notes the Hundi papers were used. In place of old Hundi papers nowadays special adhesive stamps are used. Hundi papers of value
Rs.1 | Rs.1.50 | Rs.2.50 | Rs.4 | Rs.5 and Rs.10 are available.
(h) Judicial Stamp Paper:
During proceedings in the courts of law, the court fees is paid by the stamp paper. They are therefore called court fee stamps. Court fees stamp paper of
Rs.50 | Rs.100 | Rs.200 | Rs.300 | Rs.500 | Rs.1000 | Rs.3000 | Rs.5000 and Rs.25000 are available for purchase.
(i) Court Fees Stamp Label:
These stamps are affixing stamps, the use of the same is made on the applications used before the Court and Collector and additional Collector etc. The said stamps of value are
0.25 paise | 0.50 paise | Rs.1 | Rs.2 | Rs.3 | Rs.4 | Rs.5 | Rs.10 and Rs.20, respectively.
Validity of Stamp Paper
The Section 54 of the Indian Stamp Act prescribes that if you do not need a stamp paper bought by you, then you can deposit it back to the Collector within six months from the date of purchase. In such case you will get refund of the purchase value after the deduction of 10 percent amount.
In Thiruvengada Pillai Vs. Navaneethammal & Anr, it was held by the Hon’ble Supreme Court that a stamp paper, even if it is more than six months old, is valid for the use. Section 54 just bars taking refund after six months of purchase, but it does not restrict the use of such old stamp paper for an agreement. Thus, nothing restricts you from using it even after crossing the stipulated validity period of its purchase. As such, Indian law does not have any prescribed period of limitation for its validity.
However in India, Maharashtra and Gujarat are the two states which have amended laws and now have specific law provisions stating that if a stamp is not used or surrendered back within a time frame of six months from the date of issuing these papers, they will be treated as expired.
What to Do with an Old Stamp Paper?
If you have an old stamp paper, you may have this option:
As stated above, you can always deposit back the purchased stamp paper within six months from the date of purchasing the stamp paper but it should not be spoiled or rendered unfit.
In such situation, you will have to satisfy the Collector that:
- You have purchased them for using with a bonafide intention.
- You have paid the full price of the stamp.
- The stamp paper was purchased within six months before the date of depositing.
- If you are a stamp vendor, you may get 100% refund.
Future Plans of Government
According to Business Standard newspaper, the Finance Ministry of India is planning to amend the Indian Stamp Act, in which stamp papers will come with a validity of only one year only. The purpose of such amendment is to stop misuse of stamp papers by preventing people from buying backdated papers to stake their claims on property in future, even when no deal had happened on such date. In addition to this, electronic payment of stamp duty is proposed under the new bill to restrict the same issues.
In conclusion, we can say that it is mandatory to use stamp paper while you are legalizing an agreement or you are about to make a declaration. By using a stamp paper, your document will have a legal validity and it can be enforced under the laws of the land. Depending upon type of the document, you have to choose between judicial and non-judicial stamp paper. You always have the open option of buying traditional stamp paper or alternatively you may go for E-stamping or franking process.
Current Rate of Stamp Duty
Here we give the value of stamp required for different documents as per recent amendments in Gujarat stamp authority. Every state has different rule hence readers are advised to contact an advocate or the office of stamp registrar.
If stamps of such value are not available, you can also take resources to franking.
Physical Stamp Banned by Govt. of Gujarat
- In order to encourage use of Digital stamping in lieu of non-judicial physical stamp papers the Govt. of Gujarat has banned the use of physical stamp paper effective from 1st October 2019.
- According to Govt. of Gujarat, this is a decision to promote the innovative idea of Hon’ble Prime Minister Shri Narendra Modi of ‘Digital India’.
- Hence all citizens will now have to use the facility of Digital stamping only. The facilities for e-stamping shall be available at all Scheduled banks and financial institutions under the control of State and Central Government, post offices, Licensee stamp vendors, Chartered Accountants, Company Secretaries, C&F agents of Ports, Common Service sectors under e-governance plan, Non-banking financial companies registered under RBI, Licensee notaries etc.
- According to Government because of this decision the problems of obtaining stamp papers from stamp vendors who used to create artificial scarcity of stamp papers and thereby cheating the people by demanding illegal premium will not be possible. Payments for stamp duty can be made in cash, through RTGS, net banking or through other online payment facilities. The Government intends to start e-stamping facility centers all across the state.
- The unique feature of this Digital stamping facility is that a ‘unique certificate number’ will be generated and hence it can be verified at the time of registration of documents by sub-registrar. Because of the same the document registration will become safe and secure. Further being online it can be verified any time or one can get evidence of the same any time. Apart from that now there will be freedom from buying blank stamp papers in advance. Due to this the issues of refund of stamp shall also not arise.