Section 19 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.
Section 19 of the Indian Stamp Act, 1899 deals with bills of exchange payable otherwise than on demand and promissory notes that are drawn or made out of India. The first holder of such paper in India must affix the proper stamp and cancel it before presenting the paper for acceptance or payment, or endorsing, transferring or otherwise negotiating it in India. Two provisos protect later holders and preserve penalties.
The first holder in India of a bill of exchange (payable otherwise than on demand) or promissory note drawn or made out of India must, before he presents it for acceptance or payment, or endorses, transfers or otherwise negotiates it in India, affix the proper stamp and cancel it. A later holder who receives paper already bearing a cancelled stamp, without reason to suspect irregularity, is treated as if the stamp were duly affixed and cancelled, but any penalty for omitting to affix or cancel still stands.
How to read this article
This article is based on the consolidated text of the Act consulted (latest amendment shown: Act 13 of 2021); later amendments should be checked. It explains the central Act only. Stamp duty on most instruments is fixed by the law and schedule of the State where the instrument is executed, but bills of exchange and promissory notes are among the instruments for which section 9(2)(a) names the Central Government as "the Government"; the rate is the one the central Schedule prints, and any reduction or remission under section 9 and later amendments should be checked. If you are dealing with trade paper that arrives from abroad, our loan documentation support can help you see where the stamping duty falls.
The Negotiable Instruments Act, 1881 is explained in its own posts; the Stamp Act's meanings of bill and note are covered in our article on those definitions.
Where section 19 fits
Section 3(b) charges "every bill of exchange payable otherwise than on demand or promissory note drawn or made out of India" which is accepted, paid, presented for acceptance or payment, endorsed, transferred or otherwise negotiated in India. Section 18 then excludes bills and notes from its three-month window for other instruments executed abroad. Section 19 is the rule for the stamping of those excluded items. Our article on section 3 explains the charge.
The main rule
Section 19 reads: "The first holder in India of any bill of exchange payable otherwise than on demand, or promissory note drawn or made out of India shall, before he presents the same for acceptance or payment, or endorses, transfers or otherwise negotiates the same in India, affix thereto the proper stamp and cancel the same".
The footnotes show that "payable otherwise than on demand" was inserted by Act 5 of 1927, section 5, that the word "cheque" was omitted from this section by the same provision, and that "India" was substituted for "the States" by Act 43 of 1955, section 2. As the text now reads, the section covers:
- a bill of exchange payable otherwise than on demand, drawn or made out of India; and
- a promissory note drawn or made out of India.
It speaks of a "first holder in India", so the duty sits with the person who first holds the paper within India. It is a duty to affix "the proper stamp" and to cancel it, before one of four things happens in India: presenting for acceptance, presenting for payment, endorsing, or transferring or otherwise negotiating. The adhesive stamp route for bills and notes drawn abroad is also in section 11(b), and the cancellation method is in section 12, covered in the article on adhesive stamps and how to cancel them.
Proviso (a): protection of a later holder
The first proviso says: "if, at the time any such bill of exchange, or note comes into the hands of any holder thereof in India, the proper adhesive stamp is affixed thereto and cancelled in manner prescribed by section 12 and such holder has no reason to believe that such stamp was affixed or cancelled otherwise than by the person and at the time required by this Act, such stamp shall, so far as relates to such holder, be deemed to have been duly affixed and cancelled".
Three conditions must be met together:
- the proper adhesive stamp is on the paper and has been cancelled in the manner section 12 prescribes, at the moment the paper reaches the holder;
- the holder has no reason to believe the stamp was affixed or cancelled otherwise than by the person, and at the time, the Act requires; and
- the effect is limited: the stamp is deemed duly affixed and cancelled "so far as relates to such holder".
The copy shows a footnote marker where the word "cheque" was omitted in the proviso.
Proviso (b): penalties stay
The second proviso says: "nothing contained in this proviso shall relieve any person from any penalty incurred by him for omitting to affix or cancel a stamp." So the protection in proviso (a) is for the later holder's position on the paper; it does not wipe out a penalty incurred by the person who failed to affix or cancel. The penalty provisions are in Chapter VII and have their own articles in this series, including sections 62, 63 and 64.
Who does what
| Person | Duty or position |
|---|---|
| First holder in India | Must affix the proper stamp and cancel it before presenting, endorsing, transferring or negotiating in India |
| Later holder who receives paper with a cancelled stamp and no reason to doubt it | Stamp deemed duly affixed and cancelled so far as relates to that holder |
| Any person who omitted to affix or cancel | Not relieved from any penalty incurred |
A worked example
Pearl Garments Private Limited in Delhi receives a bill of exchange from an overseas buyer, drawn abroad and payable ninety days after sight. The company is the first holder in India. Before it presents the bill for acceptance, endorses it to its bank, or otherwise negotiates it in India, section 19 requires it to affix the proper stamp and cancel it. If it endorses the bill to the bank without a stamp, the bank takes paper that bears no stamp. Suppose instead Pearl affixes and cancels the stamp in the manner section 12 describes, and endorses to the bank. The bank, which has no reason to doubt the stamp, is protected by proviso (a) so far as the stamp relates to it. If Pearl had failed in its own duty, proviso (b) means Pearl is not relieved from any penalty it incurred.
For a demand bill drawn abroad, the words of section 19 as printed do not cover it; the text consulted does not deal with it here. For the underlying trade law on foreign instruments, see our post on foreign instruments and which law applies, which concerns the Negotiable Instruments Act and not this Act.
Need help with trade paper from abroad?
If your business receives bills or notes from overseas buyers or lenders, it helps to settle in advance who will be the first holder in India and who will affix and cancel the stamp. Our loan documentation support team can help you set that up so the paper is in order before it is presented or negotiated.
Key takeaways
- Section 19 applies to bills payable otherwise than on demand and to promissory notes drawn or made out of India.
- The first holder in India must affix the proper stamp and cancel it before presenting, endorsing, transferring or negotiating the paper in India.
- A later holder is protected, so far as relates to that holder, if the stamp is affixed and cancelled as section 12 prescribes and the holder has no reason to doubt it.
- Penalties for omitting to affix or cancel are not removed.
- The word "cheque" was omitted from this section by a footnoted amendment.
Read next
- Section 18 of the Indian Stamp Act, 1899: instruments executed outside India and the three-month window
- Sections 11-12 of the Indian Stamp Act, 1899: adhesive stamps and how to cancel them
- Section 2 of the Indian Stamp Act, 1899: bill of exchange, promissory note, cheque and policy of insurance
- Bill of exchange in export trade
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.