The Maharashtra Stamp Act: What It Is For, and Its Definitions
Chapter Sixty-Two
Syllabus topic 4.2, "Maharashtra Stamp Act, 1958: Definitions [Section 2]"
Pages 329 to 333 of 378
In one line
The Stamp Act is a taxing statute: it says which documents attract duty, how much, and what happens to a document on which the duty has not been paid.
In exam wording: the Maharashtra Stamp Act 1958, Bombay Act LX of 1958, provides for the levy of stamp duty on instruments, and section 2 defines the terms the whole Act runs on, of which the most used are instrument, conveyance, duly stamped, executed, market value and Collector.
What the Act is for, and what it is not for
It is a fiscal statute. Its purpose is revenue. That single fact answers most questions about how it should be read: a taxing statute is construed strictly, the subject is not to be taxed by implication, and an exemption is read according to its terms.
It taxes instruments, not transactions. This is the distinction on which many questions turn. Duty attaches to the document, and a transaction carried through without any document attracts none. That is why an oral partition or a mortgage by deposit of title-deeds without a memorandum can escape duty, and why reducing the same bargain to writing attracts it.
It is not a registration statute. The Registration Act asks whether a document must be recorded; this Act asks whether the correct duty has been paid. The two overlap in practice because a registering officer will not register an insufficiently stamped document, but the questions are different and an answer should keep them apart.
What it does when duty is unpaid is the Act's real force, and it is dealt with in [Impounding of Instruments, and Admissibility in Evidence]. The short point is that an unstamped or insufficiently stamped instrument is not admissible in evidence until the duty and penalty are paid. The consequence is not that the transaction is void; it is that the document cannot be used.
Section 1: extent and commencement
The Act extends to the whole of the State of Maharashtra. It is the State's own stamp law, made under the entries in the State and Concurrent Lists which allow a State to fix rates of stamp duty on documents other than those the Union reserves.
Section 2: the definitions that matter
(d) "Chargeable", as applied to an instrument executed or first executed after the commencement of the Act, means chargeable under this Act; and as applied to any other instrument, chargeable under the law in force in the State when it was executed, or, where several persons executed it at different times, first executed.
The definition fixes the law by the date of execution, which is why an old document is judged by the rates then in force.
The Maharashtra Stamp Act: What It Is For, and Its Definitions
(f) "Collector" means the Chief Officer in charge of the revenue administration of a district, and any officer whom the State Government may appoint in this behalf and on whom the powers of the Collector are conferred. The Collector is the officer who adjudicates under section 31, impounds under section 33 and grants allowances under Chapter V.
(g) "Conveyance" includes a conveyance on sale, every instrument by which property, whether movable or immovable, or any estate or interest in property is transferred to or vested in any other person inter vivos, and every decree or final order of any Civil Court, and which is not otherwise specifically provided for by Schedule I.
The breadth is deliberate and is the Act's main revenue provision: a great many documents are taxed as conveyances.
(h) "Duly stamped", as applied to an instrument, means that the instrument bears an adhesive or impressed stamp of not less than the proper amount, and that the stamp has been affixed or used in accordance with the law for the time being in force in the State.
Both limbs matter. A document may carry enough duty and still not be duly stamped if the stamp was used in the wrong way, and section 12 deals with cancellation of adhesive stamps for that reason.
(i) "Executed" and "execution", used with reference to instruments, mean "signed" and "signature". The Explanation adds that those terms include the attribution of an electronic record within the meaning of the Information Technology Act 2000, which is what brings electronically signed documents within the Act.
(l) "Instrument" includes every document by which any right or liability is, or purports to be, created, transferred, limited, extended, extinguished or recorded, but does not include a bill of exchange, cheque, promissory note, bill of lading, letter of credit, policy of insurance, transfer of share, debenture, proxy and receipt.
The exclusions are not exemptions from stamp duty generally. Those instruments are the subject of the Indian Stamp Act 1899, which is the Union's law, because entry 91 of the Union List reserves the rates of duty on them to Parliament. So the two Acts divide the field: bills, cheques, notes, insurance policies, share transfers and the rest under the central Act, everything else under this one.
(na) "Market value", in relation to property which is the subject matter of an instrument, means the price which the property would have fetched if sold in open market on the date of execution of the instrument, or the consideration stated in the instrument, whichever is higher.
This is the anti-avoidance definition and it is the basis of the whole apparatus of ready reckoner rates and of section 32A. Understating the price in the deed does not reduce the duty, because the higher of the market price and the stated consideration is taken.
The Maharashtra Stamp Act: What It Is For, and Its Definitions
Other definitions used later include "bond", "clearance list", "impressed stamp", "instrument of partition", "lease", "mortgage-deed", "settlement" and "stamp", each of which is applied in the chapter that needs it.
A worked example
Zubin sells a flat at Nagpur to Ayesha. The ready reckoner value is Rs. 90 lakh; the deed states a consideration of Rs. 70 lakh.
Is the deed an instrument? Yes. It is a document by which a right is transferred, and it is not in the excluded list.
Is it a conveyance? Yes, a conveyance on sale, and property is transferred inter vivos.
On what value is duty charged? On the market value as defined: the higher of the open-market price on the date of execution and the consideration stated, that is Rs. 90 lakh. Stating a lower figure does not reduce the duty.
When is it "duly stamped"? When it bears an adhesive or impressed stamp of not less than the proper amount and the stamp has been affixed or used in accordance with the law.
Suppose the parties simply hand over possession and pay, with nothing in writing. No instrument, so nothing to tax under this Act. But nothing passes either, because section 54 of the Transfer of Property Act requires a registered instrument, which is the practical reason the Act catches almost every real transaction.
Suppose the sale is of shares in a company that owns the flat. A transfer of shares is excluded from the definition of instrument here and is dealt with by the Indian Stamp Act 1899.
Suppose the deed is signed electronically. The Explanation to clause (i) brings the attribution of an electronic record within "executed", so the Act applies.
Suppose Zubin executed the deed in 2010 and it surfaces now. Under clause (d) it is chargeable under the law in force when it was executed, not at today's rates.
What it does NOT mean
Stamp duty does not validate a transaction, and want of it does not make the transaction void. It makes the document inadmissible until duty and penalty are paid.
The Act taxes documents, not transactions. No document, no duty under this Act.
"Instrument" excludes commercial paper, which is taxed under the Indian Stamp Act 1899, not exempted.
The stated consideration does not fix the duty. Market value means the higher of the open-market price and the stated consideration.
"Duly stamped" is not only about the amount. The stamp must also have been affixed or used in accordance with law.
The Maharashtra Stamp Act: What It Is For, and Its Definitions
This is a State Act and the figures move. The consolidated text is as at 8 April 2025 and section 52A has been amended since.
Distinctions
| Registration Act 1908 | Maharashtra Stamp Act 1958 | |
|---|---|---|
| Question asked | Must this document be recorded? | Has the correct duty been paid? |
| Consequence of failure | The document does not affect the property and cannot prove the transaction, s.49 | The document is inadmissible in evidence until duty and penalty are paid |
| Curable later | No | Yes, on payment |
| Statute type | Machinery for publicity | Fiscal |
| Instrument under this Act | Instrument under the Indian Stamp Act 1899 |
|---|---|
| Conveyances, leases, mortgages, settlements, partitions, bonds | Bills of exchange, cheques, promissory notes, bills of lading, letters of credit, policies of insurance, transfers of share, debentures, proxies, receipts |
Quick revision
- A fiscal statute: it taxes instruments, not transactions, and it is construed strictly.
- s.2(d) "chargeable": by the law in force when the instrument was executed, or first executed.
- s.2(f) "Collector": the chief officer of a district's revenue administration, and any officer so appointed.
- s.2(g) "conveyance": a conveyance on sale, every instrument transferring property inter vivos, and every decree or final order of a Civil Court, not otherwise provided for in Schedule I.
- s.2(h) "duly stamped": a stamp of not less than the proper amount, and affixed or used in accordance with law.
- s.2(i) "executed" means signed, and includes the attribution of an electronic record.
- s.2(l) "instrument": every document creating, transferring, limiting, extending, extinguishing or recording a right or liability, excluding bills, cheques, notes, bills of lading, letters of credit, insurance policies, share transfers, debentures, proxies and receipts, which fall under the Indian Stamp Act 1899.
- s.2(na) "market value": the open-market price on the date of execution, or the stated consideration, whichever is higher.
Test yourself
1. What does the Stamp Act tax? Instruments, that is documents, and not transactions. A transaction carried out without any document attracts no duty under this Act.
2. Define "instrument", and name four things excluded from it. Every document by which any right or liability is, or purports to be, created, transferred, limited, extended, extinguished or recorded. Excluded are a bill of exchange, cheque, promissory note, bill of lading, letter of credit, policy of insurance, transfer of share, debenture, proxy and receipt, all of which fall under the Indian Stamp Act 1899.
3. On what value is duty on a sale deed charged? On the market value, which means the price the property would have fetched if sold in the open market on the date of execution, or the consideration stated in the instrument, whichever is higher.
The Maharashtra Stamp Act: What It Is For, and Its Definitions
4. What are the two limbs of "duly stamped"? That the instrument bears an adhesive or impressed stamp of not less than the proper amount, and that the stamp has been affixed or used in accordance with the law in force in the State.
5. Does an electronically signed document fall within the Act? Yes. The Explanation to section 2(i) provides that "signed" and "signature" include the attribution of an electronic record.
6. Is a transaction void for want of stamp duty? No. The consequence is that the instrument is inadmissible in evidence until the duty and penalty are paid, and the defect is curable.
7. By which law is an old instrument charged? By the law in force in the State when it was executed, or, where several persons executed it at different times, when it was first executed.
The rest of this subject
These notes are cut from the University's printed syllabus. Open the syllabus itself, or the past papers, for the same subject.