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Regional Training Regional Training Institute, RanchiInstitute, RanchiRegional Training Regional Training Institute, RanchiInstitute, Ranchi

Structured Training Structured Training Courseware on State Receipts Courseware on State Receipts

AuditAudit

Audit of Stamps & Registration Audit of Stamps & Registration ReceiptsReceipts

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Session ObjectivesAt the end of these sessions, the

participants will be able to • Explain the nature of Stamps and

Registration receipts• Understand the assessment and

collection mechanism and• Audit checks relating to Stamps and

Registration receipts

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Stamp Duty• Indian Stamp Act – 1899

– Latest amendment 2001

• Stamp Duty included in Concurrent List; but

• Duty on judicial stamps in State List

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Distribution between Centre and States

Union List(Entry 91)

State List(Entry 63)

Concurrent List (Entry 44)

Rates of stamp duty in respect of bills of exchange, cheques, promissory notes, bills of lading, letters of credit, policies of insurance, transfer of shares, debentures proxies and receipts

Rates of stamp duty in respect of documents other than those specified in the provisions of Union List

Stamp duties other than duties or fees collected by means of judicial stamps, but not including rates of stamp duty

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Stamp Duty• Paid by executors of

instruments by either,– Using impressed stamp paper of

proper denomination, or– By affixing stamps of proper

denomination on them

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Registration Fees• Indian Registration Act – 1908

– Consolidated all provisions relating to registration of documents spread over many Acts

• Latest amendment in 2001

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Purpose of Registration Act

• To provide a method of public registration of documents – To inform people about legal

rights and obligations arising/affecting a property

– To prevent frauds

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Nature of Stamp and Registration Receipts

• Levied on various types of instruments like,– Conveyance– Bills of exchange– Lease– Gift– Settlement– Power of Attorney– Agreements etc.

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Nature of FeesStamp Duty• Every instrument mentioned in the

schedules of the Act• Every bill of exchange/promissory

note drawn in India• Every instrument executed outside

India relating to property in India

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Adhesive Stamps

Instruments requiring adhesive stamps to be affixed

• Where duty is not exceeding 10 paise• Bills of exchange/promissory notes drawn

out of India• Entry as advocate in High Court• Notarial acts• Transfer of shares by endorsementAdhesive stamps affixed, should be

cancelled to prevent their misuse

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Exceptions to Payment of Stamp

Duty• Instruments executed

by/for/on behalf of Government

• Sale/transfer/mortgage of any ship or vessel

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Registration FeesRequired to be paid for,• Registration of documents• Searching the registers• Making copies after registration• Registrations under Section 50

of registration Act

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Registration Fees (contd.)

• Issue of commissions• Filing translations• Attending at private residences• Safe custody and return of

documents• Other matters decided by State

Government

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Registration Fees (contd.)

• Registration required for the following if property located in a particular district– Gift of immovable property– Other non-testamentary instruments

where the value is above Rs.100 in immovable property and instruments acknowledging payment to this effect

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Registration Fees (contd.)

• Leases of immovable property from year to year exceeding one year

• Non-testamentary instruments transferring/assigning decree of court

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Exceptions to Payment of Registration Fees

Given by Central Act (States give numerous exceptions)

• Any composition deed• Instrument relating to shares in a

joint stock company• Debentures issued/transferred by

such a company

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Exceptions to Payment of Registration Fees (contd.)

• Any document creating a right to obtain another document

• Any decree/order of court• Instrument of partition made by

Revenue Officer• Order granting a loan/collateral

security

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Exceptions to Payment of Registration Fees (contd.) • Order granting/ securing

repayment of agriculture loan• Endorsement on mortgage

deed• Certificate of sale in an auction

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Optional Registration• Instruments of value under

Rs.100 in immovable property or acknowledgements thereof

• lease of immovable property for less than a year

• Wills etc.

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Organizational Set up

Inspector General

RegistrarDistrict Level

Dy.Inspector GeneralSpl Dy. Collector

Sub – RegistrarSub – District Level

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Mode of Valuation & Collection

• Stamp Duty is charged on,– Value of consideration expressed in

the document; or – Market value of property, whichever

is higher• Market value fixed by Revenue

Department– Based on locality

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Mode of Valuation & Collection (contd.)

Payment is indicated on the instruments by means of a stamp as follows:

• Description of stamps that may be used on the instrument

• Instruments stamped with impressed stamps, number of stamps that may be used

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Mode of Valuation & Collection (contd.)

• For bills of exchange/promissory notes, size of paper on which they are written

• Every instrument chargeable with duty and executed by a person in India will be stamped before/at the time of execution

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Mode of Valuation & Collection (contd.)

• Every chargeable instrument executed out of India to be stamped within 3 months of receipt in India

• First holder of bill of exchange/promissory note in India to affix proper stamp and cancel it

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Mode of Valuation & Collection (contd.)

• Where ad-valorem duty is to be charged in non-Indian currency, duty will be calculated based on rate of exchange on the date of the instrument

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Mode of Valuation & Collection (contd.)

• Where ad-valorem duty is to be charged on stock/marketable security, duty will be calculated based on average stock value on the date of instrument

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Who Pays Stamp Duty?

Insurance policy

Person effecting insurance

Fire insurance Person issuing policy

Conveyance Grantee

Lease agreement

Lessee

Counterpart of lease

Lessor

Exchange Parties in equal shares

Certificate of sale

Purchaser of property

Partition Parties in proportion to shares

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Remissions• State Governments can,

– Exempt/remit stamp duty and registration fees

– Consolidate duties in issues of debentures, bonds other marketable securities

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Penalties• Indian Stamp Act & Indian Registration

Act provide for penalties– For executing instruments not duly

stamped or registered– Penalties to range from Rs.100 – Rs.5000 – Imprisonment up to 7 years– Or both

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Registers & RecordsSecretariat •Amendments to Act,

notifications, recommendations of sub-committees

HOD/Regional Offices

•Amendments, instructions relating to procedures and maintenance of records, grant of exemptions etc.

Sub-Registry •Register of registered documents, copies of documents filed, wills, exemptions, records relating to reasons for non-registering etc.

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Audit Checks• Whether the checks required to be

exercised by registering officers have been properly exercised

• Whether proper authority exists for grant of exemptions

• Verify how many documents were exempted from stamp duty and registration fees during the period under review

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Audit Checks (contd.0

• Whether effective date of grant of exemption/remission conforms to actual date of grant of exemption/remission

• Whether concessions allowed to proper category of persons/instruments

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Audit Checks (contd.)• Verify OB and CB of Cash Book

with reference to Allotment Register

• Pick out cases of high value from Fee Book for detailed checking

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Audit Checks (contd.)• Check Remittance Register

and verify remittances with reference to challans and entries in Cash Book

• Review all cases of misclassification of documents