Stamp duty may soon cover mergers and acquisitions
07 May 2010
Companies may have to pay stamp duty on mergers and acquisitions in states like West Bengal, which do not have their own Acts in this regard. This will happen if the finance ministry's suggestions on amendments to the over-a-century-old Indian Stamp Act are implemented without any change.
According to reports, the ministry on Thursday floated its suggestion for public comments on modification of the legislation enacted in 1899. The proposals have already been sent to the states for their views.
As per the suggestion, mergers and acquisitions will be covered under the Act.
Some states like West Bengal do not have their own separate Acts. In these states, mergers and acquisitions will be covered under the Indian Stamp Act, unless there are court directives. The current Act is silent on the issue.
However, there are certain states like Maharashtra where there are specific stamp duty Acts, which already cover mergers and acquisition under their legislations.
The proposed changes in the Act will also prevent carrying out insurance business without stamped policies. For this purpose, the penalty is sought to be increased from Rs200 to Rs500.