Stamp duty on issue of debentures certificates - URGENT

[Sahana Rao]

Hi All,

 

Could anyone let me know what is the rate of stamp duty supposed to be paid on issue of fully convertible debentures by a private limited company.

 

Regards,

Sahana

[Vivek Hegde]

Dear Sahana

There is no clarity on this. It is being done at 0.25% of the debenture value. In some case we have done it at 37% of the value.

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CS Vivek Hegde,B.com, ACS, CWA
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[GANESH KUMAR MONINGI]

Dear Ms. Sahana

 

in case its unsecured debenture (and not a registered mortgage with some security for eg. land in Gujarat etc), the rate that would apply would be as per the Indian Stamp Act (and not the respective State stamp Act) and the rate is the same throughout India.

 

The provision of Indian stamp act as reproduced below:

 

Reference schedule for stamp duties applicable as per Schedule I of the Indian Stamp Act, 1899

 

Instrument	Stamp Duty payable under Indian Stamp Act
Master certificate of debenture	Article 27(a). 0.05% per year of the face value of the debenture, subject to the maximum of 0.25% or Rupees twenty five lakhs, whichever is lower.

 

 

regards

Ganesh Kumar M

[Sahana Rao]

Dear Ganesh,

 

We are a private company proposing to issue fully convertible unsecured debentures with face value of Rs 50000/-. Article 27  quilifies the debentures stating "being a marketable security transferable by endorsement." Since ours is a private company the debentures are not marketable. This being the case , would the stampduty be applicable?

 

Further just for clarifiaction purposes, 0.05% per year of the face value means that we will have to pay the stamp duty every year till we reach the limit of 25 lakhs?

Request your views on the same.

 

Regards,

Sahana

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From: GANESH KUMAR MONINGI <moning...@gmail.com>
To: csmy...@googlegroups.com
Sent: Wed, 27 October, 2010 4:13:40 PM
Subject: Re: [CSMysore] Stamp duty on issue of debentures certificates - URGENT

[harish bn]

Dear Sahana,

 

Any debentures viz non marketable & unsecured  - No stamp duty is required to be paid.

 

Please refer the definition of marketable in Indian Stamp Act - It says those security which can be sold in Stock exchange in India or UK.

 

Since the above said debentures does not fall in above lines - no stamp duty is required to be paid.

 

I would be happy to know if other members have different opinion.

 

Best Regards

Harish

[GANESH KUMAR MONINGI]

Dear Sahana

 

Marketability of a security cannot be decided based on whether the security is issued by a private / public company. further as per companies act the provision with respect to transfer for shares is applicable even to debentures.

 

Thus Stamp duty is applicable whether the debentures are being issued by pub or pvt company, the distinction is only with respect of applicability of state act or central act.

 

in your case u can pay stampduty of (rs. 50,000 * 0.05% * no of yrs) and the upper cap is applicable only if it exceeds 25 lacs.

 

Regards

Ganesh Kumar M

[Sanchit Ranade]

Sir, 

It Means company has to pay stamp duty till the debentures get expired as in till the debentures get redeemed or converted.??