Sections 20 to 23 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.
Sections 20 to 23 of the Indian Stamp Act, 1899 open Part D of Chapter II, headed "Of valuations for Duty". They answer four practical questions that arise when duty depends on an amount. How is a foreign currency sum converted? How are stock and securities valued? What if the instrument states the rate or price itself? Does interest push the duty up?
Foreign currency sums are converted at the current rate of exchange on the day of the date of the instrument, or at a rate the Central Government notifies (section 20). Duty on stock or marketable or other securities is calculated on the market value, with special bases for options, repo on corporate bonds and swaps (section 21). A rate or price stated and followed in the instrument is presumed correct until the contrary is proved (section 22). Interest does not raise the duty (section 23).
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, so the State must be checked for the duty that applies once the value is found; these sections tell you how to find the value, not the rate. For debentures and the transfer of shares, section 9(2)(a) names the Central Government as "the Government". For help with a securities transaction, our share transfer team can go through the instrument with you.
Section 20: foreign currency
Section 20(1)
Where an instrument is chargeable with ad valorem duty "in respect of any money expressed in any currency other than that of India", the duty "shall be calculated on the value of such money in the currency of India according to the current rate of exchange on the day of the date of the instrument". The key words are "the day of the date of the instrument": the date on the document, not the day of execution if they differ, and not the day of stamping. A footnote shows "India" replaced "the States" by Act 43 of 1955, section 2.
Section 20(2)
The Central Government may, from time to time, by notification in the Official Gazette, prescribe a rate of exchange for converting "British or any foreign currency into the currency of India for the purposes of calculating stamp-duty", and that rate is "deemed to be the current rate for the purposes of sub-section (1)". No such notification is in the text consulted, so no rate is given here.
Section 21: stock and marketable securities
The section reads: "Where an instrument is chargeable with ad valorem duty in respect of any stock or of any marketable or other security, such duty shall be calculated on the market value of such stock or security." A footnote shows these words were substituted by Act 7 of 2019, section 16, with effect from 1 July 2020 (the footnote adds ""). "Market value" is defined in section 2(16B): the price at which a security is traded in a stock exchange, or otherwise the price or consideration mentioned in the instrument; see our article on the securities definitions.
The proviso: three special cases
The proviso, inserted by the same Act, says that the market value for calculating the stamp-duty shall be, in the case of:
| Item | Market value for duty |
|---|---|
| (i) Options in any securities | The premium paid by the buyer |
| (ii) Repo on corporate bonds | Interest paid by the borrower |
| (iii) Swap | Only the first leg of the cash flow |
These bases link to the securities Articles of the central Schedule, in particular Article 56A, which has separate rows for derivatives and for repo on corporate bonds. Section 9B charges duty on the "total market value" of securities issued off-market; see the article on section 9B.
Section 22: a stated rate or price
Section 22 reads: "Where an instrument contains a statement of current rate of exchange, or average price, as the case may require, and is stamped in accordance with such statement, it shall, so far as regards the subject-matter of such statement, be presumed, until the contrary is proved, to be duly stamped."
Notice the limits:
- the instrument must itself contain the statement of the current rate of exchange or average price;
- it must be stamped in accordance with that statement;
- the presumption covers "the subject-matter of such statement" only; and
- it is a presumption "until the contrary is proved", not a final answer.
The words "average price" remain in section 22 although section 21 now speaks of market value. The copy prints both as shown and this article does not reconcile them.
Section 23: interest
Section 23 reads: "Where interest is expressly made payable by the terms of an instrument, such instrument shall not be chargeable with duty higher than that with which it would have been chargeable had no mention of interest been made therein."
So the duty is worked out as if the instrument said nothing about interest. A longer period or a higher rate of interest does not raise the duty. The section speaks of interest "expressly made payable" and does not deal with other charges.
Summary table
| Section | Question | Answer |
|---|---|---|
| 20(1) | Foreign currency sum? | Convert at the current rate of exchange on the day of the date of the instrument |
| 20(2) | Fixed rate? | The Central Government may notify one, and it is deemed the current rate |
| 21 | Stock or securities? | Market value; special bases for options, repo on corporate bonds and swaps |
| 22 | Rate or price stated in the instrument? | Presumed duly stamped to that extent until the contrary is proved |
| 23 | Interest? | Duty is not higher than if no interest were mentioned |
Worked examples with invented figures
Foreign currency. Greenleaf Exports Private Limited signs a loan agreement for USD 10,000, dated 1 March. Assume, only to show the method, that the current rate of exchange on 1 March is Rs 80 per dollar (an invented rate). The value for duty is Rs 8,00,000. The duty on that value is for the State where the agreement is executed to fix.
Options. A buyer pays a premium of Rs 5,000 for an option in listed shares. Under the proviso to section 21, the market value for calculating duty is the premium paid by the buyer, so Rs 5,000, and not the value of the underlying shares.
Swap and repo. In a swap, the base is only the first leg of the cash flow. In a repo on corporate bonds, it is the interest paid by the borrower. Neither is the face value of the bonds.
Interest. Rohan lends Rs 1,00,000 to a friend and the document says interest is payable at 12 per cent per year. Section 23 says the document is not chargeable with duty higher than if it said nothing about interest. A document without the interest sentence and the same document with it are charged the same.
For where these valuation rules sit alongside the rest of the Act's approach to valuing property for duty, see our general note on how stamp duty is calculated.
Need help valuing an instrument?
Choosing the right base, whether a converted foreign sum, the market value of securities or the first leg of a swap, is where many errors begin. A share transfer review can help you identify the base for your instrument before duty is worked out.
Key takeaways
- Foreign currency sums are converted at the current rate of exchange on the day of the date of the instrument, or at a rate notified by the Central Government.
- Securities are valued at market value; options use the premium paid by the buyer, repo on corporate bonds uses interest paid by the borrower, and swaps use the first leg of the cash flow.
- A rate or price stated in the instrument and followed in the stamping is presumed correct until the contrary is proved.
- Interest does not raise the duty.
- The sections give the value; the rate comes from Schedule I or, for most instruments, the State.
Read next
- Section 9B of the Indian Stamp Act, 1899: stamp duty on issue and off-market transfer of securities
- Section 23A of the Indian Stamp Act, 1899: instruments on pledge of marketable securities charged as agreements
- Section 24 of the Indian Stamp Act, 1899: transfer in consideration of debt or subject to mortgage
- How stamp duty is calculated: valuation rules
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.