SHARE CERTIFICATE AND PAYMENT OF STAMP DUTY



ISSUE OF SHARE CERTIFICATE  AND PAYMENT OF STAMP DUTY

SHARE

For a Co. fund is really an important factor. One of the various ways of raising fund is from shares. Share is a part or holding of a share holder in share capital of Co. Share holder holds proportionate ownership in the Co.  and to evident the same Co. should issue Share Certificate.

 

SHARE CERTIFICATE

A share certificate is a prima facia evidence of the fact that the person named therein is the owner of such number of shares as are specified therein. Issue of share certificate is mandatory for every Co. whether public , private or  OPC. Share certificate is a certificate issued to shareholder in a certain format  evidencing ownership of share holder.

As per section 46 read with section 56 of COMPANIES ACT, 2013- Every company shall deliver (deliver means complete  in all respect i.e. signed and stamp duty paid) the share certificate to its subscribers in prescribed form (FORM SH-1) and  within prescribed time limit whether money received from subscribers or not. Section 56(4) of the Companies Act, 2013 contains the provisions related to the limits for the delivery of the certificates as under :

S.NO.

PARTICULARS

DETAILS

1.

In case of subscribers to memorandum

Within 2 months from the date of incorporation.

2.

In case of allotment of shares

Within 2 months from the date of allotment.

3.

In case of transfer or transmission of securities

Within 1 month from the date of receipt by the company of the instrument of transfer or intimation of transmission.

4.

In case of allotment of debenture

Within 6 months from the date of allotment.

 

PAYMENT OF STAMP DUTY ON SHARE CERTIFICATE

Share certificate being an instrument requires stamping as per The Indian Stamp Act, 1899 . The legal provisions for payment of stamp duty is covered under section 3 and 10 of The Indian Stamp Act, 1899 i.e. the stamping is to be done within 30 days from the date of issue of share certificate.

·         The Share certificate must bear stamp duty as per State Stamp act.

·         Stamp duty is payable even if security is issued in dematerialized form.

·         Stamp duty is payable on issue price and not on the value of security.

·         Stamp duty on share certificate is State subject, but Stamp Duty on Debenture Certificate is a Union Subject.

·         Franking is allowed only if the amount of stamp duty is upto INR 5000.

 

JURISDICTION

Stamp duty on share certificate is a state matter i.e. different amount in different states. It is paid in the state where the registered office of the company is situated.

 

DUTY PAYABLE ON STAMPING

As per section 21 of Indian Stamp Act, 1899 Stamp duty will be paid on the issue price of the share and not on the fair value of the share. Rs 1/- for every Rs 1000/- or part thereof of the value of the share including the amount of premium.

 

DOCUMENTS REQUIRED

After issue of shares, Stamp duty shall be paid to the ex-chequer of government within 30 (Thirty) days from issue of Share Certificates. Following documents shall be prepared:

A) Covering Letter (duly affixed Rs 10/- Court Fee Stamp).

B) List of Existing directors.

C) List of shareholders.

D) Copy of Original Share Certificate

E) Certified Copy of INC-32/ PAS-3 with Challan.

F) Certified Copy of Memorandum & Article of Association.

G) Rs 10/- as adjudication fee to be deposited with cashier of the department.

H) Authority letter in favour of Director / professional.

 

Ø There is a provision for payment of E-Stamps is available for all states and Union Territories on the website of stock Holding Corporation of India Ltd.

STAMP DUTY NOT PAID WITHIN 30 DAYS OF ISSUE OF CERTIFICATE

The procedure is same as procedure for submission of Stamp Duty  on time but the only difference is that we have to pay penalty i.e. upto 10 times depending upon the order being passed by department.

 

PENAL CONSEQUENCES

·   Penalty on Company : Min. Rs. 25,000 – Max.  Rs. 500,000

·   Penalty on office in default : Min. Rs. 10,000 - Max. Rs. 100,000

·   No exemption available to OPC from this compliance.

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