Articles 5 and 43 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Article 5 is the general entry in Schedule I for "agreement or memorandum of an agreement". It catches an agreement that is not charged by some more specific Article. Article 43 deals with a different paper, the note or memorandum a broker or agent sends to a principal about a purchase or sale. This article sets out both as the central Schedule prints them, with their exemptions and the cross-entries that send certain agreements elsewhere.
The central Schedule prints three rates for Article 5: two annas where the agreement relates to the sale of a bill of exchange; a rate of one anna for every Rs. 10,000 or part thereof (subject to a maximum of ten rupees) where it relates to the sale of a Government security or a share in an incorporated company or other body corporate; and eight annas for any agreement not otherwise provided for. These are the amounts in the central text, not the duty payable today: the duty on most instruments is fixed by the State where the instrument is executed.
This article is based on the consolidated text of the Act consulted (latest amendment shown: Act 13 of 2021). Later amendments should be checked. Stamp duty on most instruments is fixed by the law and schedule of the State where the instrument is executed, so check that State's schedule; this article explains the central Act only. Many amounts in the Schedule are still in annas and are quoted exactly as printed.
Article 5: what the Schedule prints
Article 5 as printed in the copy consulted is headed "Agreement or memorandum of an agreement". The footnote shows the Article as substituted by Act 6 of 1910, s. 3.
| Article | Description of instrument as printed | Proper stamp-duty as the central Schedule prints it | Exemptions as printed |
|---|---|---|---|
| 5(a) | Agreement or memorandum of an agreement, if relating to the sale of a bill of exchange | Two annas | See below |
| 5(b) | If relating to the sale of a Government security or share in an incorporated company or other body corporate | Subject to a maximum of ten rupees, one anna for every Rs. 10,000 or part thereof of the value of the security or share | See below |
| 5(c) | If not otherwise provided for | Eight annas | See below |
| 43(a) | Note or memorandum sent by a broker or agent to his principal intimating the purchase or sale on account of the principal of any goods exceeding in value twenty rupees | Two annas | None printed |
| 43(b) | The same, of any stock or marketable security exceeding in value twenty rupees | Subject to a maximum of ten rupees, one anna for every Rs. 10,000 or part thereof the value of the stock or security | None printed |
The wording in the last row is printed without the word "of" after "part thereof". We quote it as printed.
The Schedule is not the duty payable today. The figures above are the central text's. The State where the agreement is executed fixes the duty for most instruments, and its own Schedule must be consulted.
The "not otherwise provided for" clause
Clause (c) is a residual clause. An agreement falls in it only when no other Article charges it. That matters because Schedule I has many specific Articles: for a lease, a mortgage, a bond, a conveyance and so on. If a document is an agreement but another Article covers it, the other Article applies. Section 6 of the Act deals with the case where one instrument falls under several descriptions; see our article on section 6.
A business that has an agreement and is not sure whether it falls in Article 5(c) or in a specific Article can ask for it to be read under our agreement drafting service.
Exemptions printed under Article 5
The Schedule prints two live exemptions for "agreement or memorandum of agreement":
- (a) an agreement for or relating to the sale of goods or merchandise exclusively, "not being a note or memorandum chargeable under No. 43";
- (b) an agreement made in the form of tenders to the Central Government for or relating to any loan.
The copy prints a row of asterisks where a further exemption (c) stood. The footnote says "Clause (c) omitted by the A.O. 1950". We say nothing about what it provided.
The qualification in (a) is a useful pointer. A contract for the sale of goods only is not charged under Article 5, but a broker's note or memorandum of the kind in Article 43 is charged under that Article even where it relates to goods.
Cross-entries that point away from Article 5
Schedule I is arranged alphabetically and uses "See" entries. The copy prints three of them that touch Article 5:
- "Agreement to lease. See LEASE (No. 35)." An agreement to lease is dealt with under the lease Article; see our article on the lease Articles.
- "Hiring agreement or agreement for service. See AGREEMENT (No. 5)." These agreements are therefore brought to Article 5.
- "Letter of guarantee. See AGREEMENT (No. 5)." A letter of guarantee is also brought to Article 5. For the contract of guarantee itself, see our guide on stamp duty on guarantee and indemnity deeds.
Section 23A of the Act ties into Article 5(c). It says that an instrument (not being a promissory note or bill of exchange) given on the deposit of a marketable security as security for a loan or debt, or one that makes redeemable or qualifies a duly stamped transfer intended as a security, is chargeable as if it were an agreement or memorandum of an agreement under Article 5(c). Its release or discharge is chargeable with the like duty. Our article on section 23A explains it.
Article 43: the broker's note
Article 43 is headed "Note or memorandum, sent by a broker or agent to his principal intimating the purchase or sale on account of such principal". The footnote shows it as substituted by Act 6 of 1910, s. 3. It has two clauses, by what is bought or sold: goods exceeding in value twenty rupees, and stock or marketable security exceeding in value twenty rupees. The thresholds of twenty rupees and the amounts are as printed.
The Article attaches to the note or memorandum sent to the principal, not to the underlying sale. A trader who sells goods under an agreement for the sale of goods exclusively is within the Article 5 exemption described above, but the broker's note about that sale is a separate paper that Article 43 charges.
Who bears the cost of the stamp
Section 29 of the Act says that, in the absence of an agreement to the contrary, the expense of the proper stamp is borne by the person drawing, making or executing the instruments named in a list of Articles. The list in the copy consulted names Articles such as 6, 13, 15, 40 and 49. It does not name Article 5. So the section does not decide the point for an Article 5 agreement. See our article on section 29.
An example with invented names
Rao Traders and Mehra Foods sign a memorandum recording that Rao will sell Mehra a quantity of packaged goods on stated terms. It is an agreement relating to the sale of goods exclusively, so it is within exemption (a) to Article 5, unless it is a broker's note falling under Article 43. Suppose instead that they sign a general agreement about marketing cooperation that no other Article covers: it falls under clause (c), for which the central Schedule prints eight annas, and the State where it is executed fixes the duty actually payable.
For a wider view of agreements and when they need stamping, see our guide on stamp duty on contracts: which agreements need stamping.
What the text does not say
The copy consulted does not define "sale" for the purposes of clauses (a) and (b). The Act's definitions in section 2 do not include "agreement". Whatever a particular State has done with Article 5 is not in the central text.
Need help with an agreement and its stamping?
If you are about to sign an agreement and want to know which Article applies and where the State's schedule differs, our team can read the draft with you under our agreement drafting service. We identify the governing Article first and then the State.
Key takeaways
- Article 5 is the residual Article for an agreement or memorandum of an agreement: clauses (a), (b) and (c).
- The central Schedule prints two annas, one anna per Rs. 10,000 or part (maximum ten rupees), and eight annas respectively.
- Sale of goods exclusively, and tenders to the Central Government for a loan, are exempted; a broker's note under Article 43 is not.
- Agreement to lease is sent to Article 35; hiring agreements and letters of guarantee are sent to Article 5.
- The amounts are the central text's; the State where the instrument is executed fixes the duty actually payable.
Read next
- Article 6 of Schedule I: deposit of title deeds, pawn or pledge
- Schedule I: how the Schedule is laid out and which duties the States fix
- Section 23A: instruments on pledge of marketable securities charged as agreements
- Stamp duty on agreement to sell
Disclaimer: Based on the consolidated text of the Indian Stamp Act, 1899 published by the Department of Revenue, whose latest amendment shown is Act 13 of 2021, as consulted on 2 October 2026. Only the central text is covered: stamp duty on most instruments is fixed by the law and schedule of the State where the instrument is executed, and State amendments, rules, notifications and later amendments should be checked. This article is general information, not legal advice; check the official text before acting.