E-STAMP AND ITS VALIDITY IN INDIA

E-stamp is a modernized version of collection of stamp duties from the public by the government. This method, which is a computer based application, is considered to be more safe and reliable way of paying non-judicial stamp duty to the Government. It has replaced the usage of traditional stamp paper by its effectiveness and efficiency as it is considered to be more reliable, secured and tamper-proof system.

E-stamping offers a secure electronic method to stamp documents involved in any legal transaction and obviates leakage of government revenue. This e-stamping system is so effective that it enables a depository of all the relevant information in a secured electronic form and creates a central data bank for effortless verification and authentication.

The introduction of e-stamping system in India has led the public to generate online MIS reports. MIS reports are Management Information System which consists of all the relevant information relating to e-stamping. It simplifies the procedure of payment of stamp duty and makes it snag free for easy and viable access by concerned people. All the information secured and transmitted through the entire process is kept under the umbrella of SHCIL (Stockholding Corporation of India), which is the central record keeping agency for all e-stamps used in the country. It is a corporation which has been authorised by the Central Government of India to keep all the records under its diligence. The working model of SHCIL consists of everything related to the e-stamping project, starting from the user registration to administration and managing e-stamping applications. The operations of all the e-stamp documents and files along with the record maintenance are some of the key responsibilities of SHCIL also.

E-stamps can also be used in regard to all the important instruments on which stamp duty is generally payable. The instruments shall include every kind of transfer documents such as sale agreement, conveyance deed, exchange deed, lease deeds, gift deed, mortgage deed, power of attorney, agreement of tenancy, deed of partition, leave and license agreement, and so on.

The system of e-stamping offers multi-level security and it also ensures one of the main benefits of using e-stamps which is that such stamps can be generated within minutes and are absolutely tamper-proof. As soon as an e-stamp certificate is issued, the system neither allows anyone to use it in an unauthorised way nor gives any space to make a copy of it. The plausibility of duplication of the stamp certificate gets ruled out through the application of an optical watermarking. The greatest advantage of using the system of e-stamps is its authenticity which can be verified online at any given point of time. Since every e-stamp paper gets generated with a unique identification number (UIN) it allows users to verify its authenticity and genuineness on the e-stamping website.

Over the period of time, along with development, transformation and coming up of new age diversities in different arenas, different sort of transactions take place at almost every other minute. From setting up a business agreement to a merger or an acquisition of companies, or starting a new partnership firm, legal transactions have been an inevitable step to initiate a process. To abide by the rules and regulations framed by the government, one has to pay stamp duty as an essential part of almost every transaction which takes place in India. This payment is usually done through the purchase of stamp paper and stands as a proof that the person has paid the due share of government for his/her future reference.

The Indian government had established the e-stamping system in order to tackle counterfeiting and make the payments of stamp duty easier and snag free. Some states such as Delhi or Karnataka, all the stamp duty needs to be paid through e-stamping method.

Currently, the system of e-stamping is prevailing in states like Gujarat, Daman & Diu, Karnataka, Himachal Pradesh, NCT Delhi, Uttarakhand, Rajasthan, Tamil Nadu, Pondicherry, Assam, Uttar Pradesh, Chhattisgarh, Jharkhand and Jammu & Kashmir.

Transferring any property physically to any other party is not treated as valid in the eyes of the law unless and until, the buyer has paid stamp duty to show it as a proof of the purchase of a property. Therefore, stamp duty is the tax paid to the government at the time of property transactions and makes the transfer certificate hold a verified position in a court of law.

Whenever the question of validity of a stamp paper arises, the general rule which is provided by the Indian Stamp Act, 1899 prevails that is,

  • It is valid for six months if it is paid on time and as per the rules and regulations.
  • It is valid for three months if the stamp duty is paid on foreign documents.
  • Unless and until a stamp duty is paid, the agreement will not be valid in a court of law and will stand null.
  • The Indian Penal Code marks it as a criminal offence for not paying the required stamp duty.
  • Any delay in payment of stamp duty can make the individual liable to pay a massive fine ranging from 2% to 200% of the total payable amount.
  • The stamp duty has to be made by the purchaser or buyer and not the seller.

All the points mentioned above must be kept in mind while entering into any transaction and one should pay the stamp duty according to the rules set by the Indian Stamp Act, 1899 or the state act prevailing in the concerned state.

But according to the Apex Court’s judgment in the case of Thiruvengada Pillai vs. Navaneethammal and Anr. , the stamp papers do not have any expiry period.

The Indian Stamp Act, 1899, is however silent on the date of expiry of a stamp paper, but as per section 54 of the act, any person possessing a stamp paper for which he has no immediate use can seek refund of the value thereof by surrendering such stamp paper to the Collector provided it was purchased within the period of six months.

It is evident that the time limit of six months is given for refund and not for use of stamp paper. Hence, every e-stamp paper is valid for undetermined period as of now according to the current law and can be used at any point of time.