Stamp Duty Tax: How to Calculate It?

Almost everybody who is involved in any commercial transaction has to deal with creating, authorizing or validating a number of official documents. Hence it would serve him well to know about stamp duty, which is nothing but a tax levied on documents to make them legally effective. Calculation of the stamp duty is thus critical if you want to have valid legal documentation.

The Indian Stamp Act, 1899 and the Bombay Stamp Act, 1958 are the prevalent laws on Stamp Duty across India with sometimes minor changes and amendments in most states of India. So the provisions discussed below are mainly based on these two laws.

Usually it is easy enough to calculate the stamp duty payable as per the rates provided in the Indian Stamp Act or the Stamp Act of the state, where one is drawing up the document concerned, and pay accordingly. But in complex cases, the person paying the duty may not be able to ascertain the correct stamp duty and may have to apply for help or for the opinion of the Collector of Stamps. The very purpose of this post is to make a person lacking formal legal training aware of the very basic features and modes of stamp duty calculation, so that in most of the usual transactions, he can cease to be dependent on lawyers for matters such as calculation of stamp duty and therefore save a lot of cost incurred in the process.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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