Liability of Instruments to Duty

The principle is that a single economic transaction should bear one full duty. Without section 4, a conveyance completed by a sale deed, a power of attorney and a release would pay full duty three times over.

Section 4 and section 5 are opposites, and the pair is regularly examined:

Section 4: one transaction, several instruments. One full duty, plus a nominal duty on each of the others.

Section 5: one instrument, several transactions. The aggregate of the duties that separate instruments would have borne.

Section 5: several distinct matters in one instrument

Any instrument comprising or relating to several distinct matters or transactions is chargeable with the aggregate amount of the duties with which separate instruments, each relating to one of those matters, would have been chargeable.

So a single deed that both sells a shop and leases a godown pays the sale duty plus the lease duty. Putting two bargains in one paper saves paper, not duty.

Section 6: one instrument within several descriptions

Subject to section 5, an instrument so framed as to come within two or more of the descriptions in Schedule I, where the duties are different, is chargeable only with the highest of those duties.

The contrast with section 5 is the point. Section 5 deals with distinct matters, and adds. Section 6 deals with one matter that answers more than one description, and takes the highest. A document is not taxed twice for the same transaction merely because the Schedule describes it in two ways.

The proviso: nothing in the Act renders chargeable with duty exceeding one hundred rupees a counterpart or duplicate of an instrument chargeable with duty and on which the proper duty has been paid.

Section 7: payment of higher duty in certain cases

Notwithstanding sections 4 or 6 or any other enactment, unless it is proved that the duty chargeable has been paid on the principal or original instrument, or in accordance with this section, the higher duty is payable. The section is an anti-avoidance provision supporting sections 4 and 6: the nominal duty on a secondary instrument, and the single duty under section 6, are available only where the full duty on the principal has in fact been paid.

Section 8: bonds and securities on Government loans

Bonds or securities, other than debentures, issued on loans under Act IX of 1914 or any other law, are dealt with by section 8, which provides for such securities being deemed duly stamped in the circumstances it sets out. It is a narrow provision of little practical importance to this syllabus and is noted here for completeness.

Section 9: power to reduce, remit or compound

The State Government, if satisfied that it is necessary to do so in the public interest, may by rule or order published in the Official Gazette:

(a) reduce or remit, prospectively or retrospectively, in the whole or any part of the State, the duties or penalty, or both, with which any instruments, or any particular class of instruments, or instruments executed by or in favour of any particular class of persons, are chargeable; and

(b) provide for the composition or consolidation of duties in the case of issues by an incorporated company or other body corporate of bonds or marketable securities other than debentures.

Three features are worth marking: the power is conditional on public interest, it may be exercised retrospectively, and it extends to penalty as well as duty. Concessional rates for particular classes of transaction, for instance in favour of certain family transfers, are made under this section.

A worked example

Bhaskar is buying a plot at Solapur from Chaya for Rs. 1 crore.

The transaction is completed by four documents: a sale deed, a power of attorney to complete formalities, a release by Chaya's brother of a possible claim, and an indemnity.

Section 4 applies: one transaction, several instruments. The principal instrument, which the parties may nominate and which will be the sale deed, bears the full conveyance duty on the market value. Each of the other three bears five hundred rupees.

Change the facts. Suppose instead a single deed sells the plot and leases a separate godown to Bhaskar. Two distinct transactions in one instrument, so section 5 applies and the duty is the aggregate of the sale duty and the lease duty.

Change again. Suppose the single deed is one transaction which the Schedule describes both as a conveyance and as an agreement, at different rates. Section 6 applies and only the highest duty is charged.

Chaya executed the deed in Gujarat. Under section 3(b) it is chargeable here if it relates to property situate in Maharashtra and is received in Maharashtra.

Bhaskar keeps the original abroad and produces a photocopy. The first proviso to section 3 charges the copy with full duty if the proper duty on the original has not been paid.

The parties nominate the indemnity as the principal instrument to save duty. They may nominate under section 4(2), but section 7 defeats the scheme: the concession depends on the duty chargeable having in fact been paid on the principal or original instrument, and a nomination that does not reflect the transaction will not carry the full conveyance duty.

A counterpart of the lease is executed for Bhaskar's records. Under the proviso to section 6 it is not chargeable with duty exceeding one hundred rupees, the proper duty having been paid on the original.

What it does NOT mean

Section 4 does not make the other documents free. Each bears five hundred rupees, not nothing, and not one hundred since the 2025 amendment.

Section 4 does not apply to unrelated documents. They must complete a single transaction of one of the named kinds.

Section 5 does not overlap with section 6. Distinct matters are added; several descriptions of one matter take the highest.

The parties' nomination is not conclusive. Section 7 requires the duty on the principal or original instrument actually to have been paid.

A copy is not automatically free of duty. It is chargeable with full duty if the original's duty was not paid.

Section 9 is not a general dispensing power. It requires satisfaction that the reduction or remission is necessary in the public interest.

Distinctions

Quick revision

• s.3 charges instruments in Schedule I executed in the State, and those executed outside it which relate to property or a matter in the State and are received here. A copy is chargeable with full duty if the original's duty was unpaid. Government and registered ships or vessels are exempt.
• s.4: one transaction of development agreement, sale, lease, mortgage or settlement completed by several instruments; full duty on the principal, five hundred rupees on each other; the parties nominate the principal. The figure was raised from one hundred in 2025.
• s.5: one instrument, several distinct matters, the aggregate of the duties.
• s.6: one instrument within several descriptions, the highest duty; a counterpart or duplicate capped at one hundred rupees where the proper duty was paid on the original.
• s.7: the concessions in sections 4 and 6 depend on proof that the duty on the principal or original instrument was paid.
• s.9: the State Government may, in the public interest, reduce or remit duty or penalty, prospectively or retrospectively, and may provide for composition or consolidation for corporate bonds and marketable securities.

Test yourself

1. Which instruments does section 3 charge? Those mentioned in Schedule I executed in the State on or after the Act's commencement, and those executed outside the State which relate to property situate or to a matter or thing done or to be done in the State and are received in the State.

2. A sale is completed by four documents. How is duty charged? Under section 4, the principal instrument bears the full duty prescribed for a conveyance and each of the other three bears five hundred rupees, the parties being entitled to determine which is the principal instrument.

3. What was the amount before 2025, and what is it now? It was one hundred rupees and is now five hundred rupees, raised by the Maharashtra Stamp (Amendment) Act 2025.

4. Distinguish sections 5 and 6. Section 5 applies where one instrument comprises several distinct matters or transactions, and charges the aggregate of the duties. Section 6 applies where one instrument is so framed as to fall within two or more descriptions in Schedule I, and charges only the highest duty.

5. Can the parties defeat duty by nominating a trivial document as the principal instrument? No. Section 7 provides that, unless it is proved that the duty chargeable has been paid on the principal or original instrument or in accordance with that section, the higher duty is payable notwithstanding sections 4 and 6.

6. Is a photocopy of a deed chargeable with duty? Yes, with full duty under the first proviso to section 3, if the proper duty on the original has not been paid, and whether or not the copy is certified.

7. What are the limits on the State Government's power under section 9? It must be satisfied that the reduction or remission is necessary in the public interest, and it must act by rule or order published in the Official Gazette. The power extends to duty and penalty, and may be exercised prospectively or retrospectively.