RTI, Ranchi1 Regional Training Institute, Ranchi Structured Training Courseware on State Receipts Audit Audit of Stamps & Registration Receipts

RTI, Ranchi2 Session Objectives At the end of these sessions, the participants will be able to Explain the nature of Stamps and Registration receipts Understand the assessment and collection mechanism and Audit checks relating to Stamps and Registration receipts

RTI, Ranchi3 Stamp Duty Indian Stamp Act – 1899 –Latest amendment 2001 Stamp Duty included in Concurrent List; but Duty on judicial stamps in State List

RTI, Ranchi4 Distribution between Centre and States Union List (Entry 91) State List (Entry 63) Concurrent List (Entry 44) Rates of stamp duty in respect of bills of exchange, cheques, promissory notes, bills of lading, letters of credit, policies of insurance, transfer of shares, debentures proxies and receipts Rates of stamp duty in respect of documents other than those specified in the provisions of Union List Stamp duties other than duties or fees collected by means of judicial stamps, but not including rates of stamp duty

RTI, Ranchi5 Stamp Duty Paid by executors of instruments by either, –Using impressed stamp paper of proper denomination, or –By affixing stamps of proper denomination on them

RTI, Ranchi6 Registration Fees Indian Registration Act – 1908 –Consolidated all provisions relating to registration of documents spread over many Acts Latest amendment in 2001

RTI, Ranchi7 Purpose of Registration Act To provide a method of public registration of documents –To inform people about legal rights and obligations arising/affecting a property –To prevent frauds

RTI, Ranchi8 Nature of Stamp and Registration Receipts Levied on various types of instruments like, –Conveyance –Bills of exchange –Lease –Gift –Settlement –Power of Attorney –Agreements etc.

RTI, Ranchi9 Nature of Fees Stamp Duty Every instrument mentioned in the schedules of the Act Every bill of exchange/promissory note drawn in India Every instrument executed outside India relating to property in India

RTI, Ranchi10 Adhesive Stamps Instruments requiring adhesive stamps to be affixed Where duty is not exceeding 10 paise Bills of exchange/promissory notes drawn out of India Entry as advocate in High Court Notarial acts Transfer of shares by endorsement Adhesive stamps affixed, should be cancelled to prevent their misuse

RTI, Ranchi11 Exceptions to Payment of Stamp Duty Instruments executed by/for/on behalf of Government Sale/transfer/mortgage of any ship or vessel

RTI, Ranchi12 Registration Fees Required to be paid for, Registration of documents Searching the registers Making copies after registration Registrations under Section 50 of registration Act

RTI, Ranchi13 Registration Fees (contd.) Issue of commissions Filing translations Attending at private residences Safe custody and return of documents Other matters decided by State Government

RTI, Ranchi14 Registration Fees (contd.) Registration required for the following if property located in a particular district –Gift of immovable property –Other non-testamentary instruments where the value is above Rs.100 in immovable property and instruments acknowledging payment to this effect

RTI, Ranchi15 Registration Fees (contd.) Leases of immovable property from year to year exceeding one year Non-testamentary instruments transferring/assigning decree of court

RTI, Ranchi16 Exceptions to Payment of Registration Fees Given by Central Act (States give numerous exceptions) Any composition deed Instrument relating to shares in a joint stock company Debentures issued/transferred by such a company

RTI, Ranchi17 Exceptions to Payment of Registration Fees (contd.) Any document creating a right to obtain another document Any decree/order of court Instrument of partition made by Revenue Officer Order granting a loan/collateral security

RTI, Ranchi18 Exceptions to Payment of Registration Fees (contd.) Order granting/ securing repayment of agriculture loan Endorsement on mortgage deed Certificate of sale in an auction

RTI, Ranchi19 Optional Registration Instruments of value under Rs.100 in immovable property or acknowledgements thereof lease of immovable property for less than a year Wills etc.

RTI, Ranchi20 Organizational Set up Inspector General Registrar District Level Sub – Registrar Sub – District Level Dy.Inspector General Spl Dy. Collector

RTI, Ranchi21 Mode of Valuation & Collection Stamp Duty is charged on, –Value of consideration expressed in the document; or –Market value of property, whichever is higher Market value fixed by Revenue Department –Based on locality

RTI, Ranchi22 Mode of Valuation & Collection (contd.) Payment is indicated on the instruments by means of a stamp as follows: Description of stamps that may be used on the instrument Instruments stamped with impressed stamps, number of stamps that may be used

RTI, Ranchi23 Mode of Valuation & Collection (contd.) For bills of exchange/promissory notes, size of paper on which they are written Every instrument chargeable with duty and executed by a person in India will be stamped before/at the time of execution

RTI, Ranchi24 Mode of Valuation & Collection (contd.) Every chargeable instrument executed out of India to be stamped within 3 months of receipt in India First holder of bill of exchange/promissory note in India to affix proper stamp and cancel it

RTI, Ranchi25 Mode of Valuation & Collection (contd.) Where ad-valorem duty is to be charged in non-Indian currency, duty will be calculated based on rate of exchange on the date of the instrument

RTI, Ranchi26 Mode of Valuation & Collection (contd.) Where ad-valorem duty is to be charged on stock/marketable security, duty will be calculated based on average stock value on the date of instrument

RTI, Ranchi27 Who Pays Stamp Duty? Insurance policyPerson effecting insurance Fire insurancePerson issuing policy ConveyanceGrantee Lease agreementLessee Counterpart of lease Lessor ExchangeParties in equal shares Certificate of sale Purchaser of property PartitionParties in proportion to shares

RTI, Ranchi28 Remissions State Governments can, –Exempt/remit stamp duty and registration fees –Consolidate duties in issues of debentures, bonds other marketable securities

RTI, Ranchi29 Penalties Indian Stamp Act & Indian Registration Act provide for penalties –For executing instruments not duly stamped or registered –Penalties to range from Rs.100 – Rs.5000 –Imprisonment up to 7 years –Or both

RTI, Ranchi30 Registers & Records SecretariatAmendments to Act, notifications, recommendations of sub-committees HOD/Regional Offices Amendments, instructions relating to procedures and maintenance of records, grant of exemptions etc. Sub-RegistryRegister of registered documents, copies of documents filed, wills, exemptions, records relating to reasons for non-registering etc.

RTI, Ranchi31 Audit Checks Whether the checks required to be exercised by registering officers have been properly exercised Whether proper authority exists for grant of exemptions Verify how many documents were exempted from stamp duty and registration fees during the period under review

RTI, Ranchi32 Audit Checks (contd.0 Whether effective date of grant of exemption/remission conforms to actual date of grant of exemption/remission Whether concessions allowed to proper category of persons/instruments

RTI, Ranchi33 Audit Checks (contd.) Verify OB and CB of Cash Book with reference to Allotment Register Pick out cases of high value from Fee Book for detailed checking

RTI, Ranchi34 Audit Checks (contd.) Check Remittance Register and verify remittances with reference to challans and entries in Cash Book Review all cases of misclassification of documents