Stamp Duty 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.
Stamp duty on shares depends on three things: whether the shares are issued or transferred, whether the dealing goes through a stock exchange or depository or outside them, and the Article of Schedule I that fits the instrument. The central Act fixes who collects and pays; the rates for many instruments are fixed by each State's law, so no State rate appears here. This guide reads the Indian Stamp Act, 1899 (central text, latest amendment shown Act 13 of 2021) with section 56 of the Companies Act, 2013 in the Ministry's consolidated text (last updated 29 July 2022) and the Share Capital Rules as consolidated in the Ministry's e-book, consulted on 3 October 2026. Later amendments should be checked.
On an issue outside a depository, section 9B(a) makes the issuer pay duty at the place of its registered office on the total market value of the securities. On a sale or transfer outside a stock exchange or depository, section 9B(b) makes the seller, transferor or issuer pay on the consideration stated in the instrument. Through a stock exchange or depository, section 9A makes the exchange or depository collect. An instrument not duly stamped is inadmissible in evidence (section 35), and the Companies Act requires a transfer instrument to be duly stamped (section 56(1)).
Key terms
The central Act defines "marketable security" as one capable of being traded in a stock exchange in India (section 2(16A)). "Market value" in section 2(16B) means: for a security traded on a stock exchange, the price at which it is traded; for one transferred through a depository but not traded on the exchange, the price or consideration mentioned in the instrument; and for one dealt in outside both, the price or consideration mentioned in the instrument. Section 21 says where an instrument is chargeable with ad valorem duty on stock or marketable security, duty is calculated on the market value, with the provisos it prints for options, repo on corporate bonds and swaps.
If you are transferring shares of a private company and want the documents checked, see our share transfer service.
Who pays and collects: sections 8A, 9A and 9B
| Situation | Provision | Who pays or collects |
|---|---|---|
| Issuer issues securities to depositories | s.8A(a) | Issuer is chargeable on the total amount issued; the securities need not be stamped |
| Registered ownership moves between person and depository, or depository and beneficial owner | s.8A(b) | Not liable to duty |
| Sale through a stock exchange | s.9A(1)(a) | Exchange or authorised clearing corporation collects from the buyer, on behalf of the State |
| Transfer by a depository not through an exchange transaction | s.9A(1)(b) | Depository collects from the transferor on the consideration amount |
| Issue followed by a change in depository records | s.9A(1)(c) | Depository collects from the issuer on the total market value in the allotment list |
| Issue not through exchange or depository | s.9B(a) | Issuer pays at the place of its registered office, on total market value, at the Schedule I rate |
| Sale, transfer or reissue not through exchange or depository | s.9B(b) | Seller, transferor or issuer pays on the consideration in the instrument, at the Schedule I rate |
Section 9A(2) says the instruments it covers are chargeable at the Schedule I rate and need not be stamped, and section 9A(3) says no State stamp duty is to be charged on any note, memorandum or other document, electronic or otherwise, associated with those transactions. Section 9A(4) requires the exchange, clearing corporation or depository to transfer the duty collected to the State within three weeks of the end of each month, as the sub-section describes.
For deeper reading, see our guides on section 8A and section 9B.
What Schedule I prints for shares
- Article 27 (debenture), as printed: 0.005% on issue and 0.0001% on transfer and re-issue, with the exemption for debentures issued under a duly stamped registered mortgage-deed as it sets out.
- Article 19 (certificate evidencing title to shares or stock): the entry excludes a certificate or document covered by Articles 27 and 56A.
- Article 56A (security other than debenture): it prints percentage rates by head for issue, transfer on a delivery basis, transfer on a non-delivery basis, derivatives and Government securities. In the copy we read the columns of the table are run together, so the figures are not repeated here; read the Schedule itself.
- Article 62 (transfer): the entry opens with "whether with or without consideration" and prints the listed cases, including transfer of an interest secured by a bond, mortgage-deed or policy, and the transfer of trust property from one trustee to another.
- Article 33 (gift): an instrument of gift, not being a settlement, will or transfer under Article 62; in the copy we read, the duty column for it refers to the same duty as a conveyance (Article 23) on the value of the property as set forth in the instrument. Because the columns are jumbled in the text, check the Schedule before relying on this.
Gift of shares therefore turns on the instrument actually used and the Article it falls under. Where the central Schedule has no separate share-gift entry, that entry is not printed in the copy we read. The State's own schedule may differ.
The Companies Act side
Section 56(1) of the Companies Act says a company shall not register a transfer of securities, other than between persons both entered as beneficial holders in a depository's records, unless a proper instrument of transfer in the prescribed form, duly stamped, dated and executed by or on behalf of both transferor and transferee and stating the transferee's name, address and occupation, has been delivered to the company within sixty days from the date of execution, with the certificate or letter of allotment. Rule 11 of the Share Capital Rules says an instrument of transfer of securities in physical form shall be in Form SH-4 and be delivered to the company within sixty days of execution. Section 56(4)(c) requires the company to deliver certificates within one month from receipt of the instrument of transfer. Section 56(6) prints a penalty of fifty thousand rupees on the company and every officer in default of sub-sections (1) to (5).
On issue, section 46 and rule 5 of the Share Capital Rules deal with the share certificate: it is issued under a Board resolution, in Form SH-1 or as near as possible, signed by two directors or a director and the company secretary (with the explanation for a One Person Company), and entered in the register of members.
If the stamp is short
Section 35 says no instrument chargeable with duty shall be admitted in evidence or acted upon, registered or authenticated unless duly stamped. The proviso lets it be admitted on payment of the duty or the deficiency with a penalty of five rupees or, when ten times the proper duty or deficient portion exceeds five rupees, ten times that amount. Section 62(1)(b) punishes a person executing or signing a chargeable instrument without its being duly stamped with fine that may extend to five hundred rupees. States have their own amendments, so check the State where the instrument is executed.
Worked example (invented names)
Alpha Tech Private Limited allots 10,000 equity shares of face value Rs 10 at a price of Rs 40 to Neha Rao outside any depository: total market value = 10,000 x 40 = Rs 4,00,000. Section 9B(a) puts the duty on the company, paid at the place of its registered office at the Schedule I rate; the rate is the State's matter, so the company reads that Article and rate before allotment. Later Neha transfers 2,000 of those shares to Karan Shah for Rs 1,00,000 by a Form SH-4 instrument outside any depository: section 9B(b) makes Neha, as transferor, liable on the consideration of Rs 1,00,000 at the rate, and the company will register the transfer only if the instrument is duly stamped.
Common mistakes
- Assuming the same duty applies to issue, transfer and gift.
- Treating demat and physical transfers alike: sections 9A and 9B split them.
- Using a stamp bought in one State without checking where the State law places the duty.
- Stating the consideration at less than the value in the instrument.
- Delivering Form SH-4 to the company after sixty days without Board terms on indemnity.
Need help with a share transfer?
We can check the instrument, the Form SH-4, the stamping position for the State involved and the company's records before the transfer is registered. See our share transfer service.
Key takeaways
- Section 9B puts the duty on issue on the issuer and on off-market transfer on the seller or transferor.
- Section 9A makes exchanges and depositories collect for on-market and depository transfers.
- Section 56(1) of the Companies Act needs a duly stamped transfer instrument.
- Section 35 makes an unstamped instrument inadmissible until the deficiency and penalty are paid.
- Gift of shares turns on the Article that fits the instrument and on the State schedule.
Read next
- Transmission of Shares on a Shareholder's Death
- Is a Valuation Report Needed When Shares Are Transferred
- Share Certificate, Letter of Allotment, Share Warrant, Transfer and Proxy: Schedule I
- Articles 27 and 56A: Debenture, Shares and Other Securities
Disclaimer: Based on the Companies Act, 2013 in the Ministry of Corporate Affairs consolidated text (last updated 29 July 2022), the Rules as consolidated in the Ministry's e-book and the other official texts named in this article, as consulted on 3 October 2026. Later amendments, notifications, circulars, forms and fees should be checked. Formats are general drafts to be adapted to the company's articles and facts. This article is general information, not legal advice; check the official text before acting.