Understanding Stamp Papers in India: Types and Purposes

India's legal system relies heavily on the use of stamp papers to ensure certain documents are legally recognized and can be enforced in a court of law if necessary. These documents are issued under specific laws and regulations, which ensure that parties understand the requirements and legal implications of using such papers. This article explores the different types of stamp papers, including judicial and non-judicial, and their various uses and significance.

What Are Stamp Papers?

In India, stamp papers are categorized into two main types: judicial and non-judicial. The use of these papers is mandated by law to protect the interests of parties involved in different types of transactions. The revenue generated from the sale of stamp papers also serves as a source of income for the government.

Non-Judicial Stamp Papers

Non-judicial stamp papers are issued under The Indian Stamps Act 1899 and other revenue laws of the center or State. These documents are used to collect revenue or taxes in respect of transactional arrangements between parties. Examples of such transactions include property transfer agreements, lease agreements, affidavits, and other legal instruments that do not require court intervention.

Every non-judicial transaction will have a specific amount of stamp duty, fixed by the state, as one of the main sources of revenue for the states.

Objectives of Non-Judicial Stamp Papers

Documenting business transactions or making a contract for an upcoming project using non-judicial stamp papers is mandatory. Ensuring relevant legal documents like lease agreements, purchase and sale of goods, business/contract agreements, loan agreements, power of attorney, affidavits, organizational notes, and indemnity bonds are properly stamped to guarantee their enforceability in law.

The Indian Stamps Act 1899 is concerned with monetary gain, and if the document is legally protected, the party claiming its rights on that instrument will not be defeated. Each state has its own stamp duty law, and there is a central law that deals with the stamp.

Judicial Stamp Papers

Judicial stamp papers, also known as court-fee stamp papers, are issued under The Court-Fees Act 1870, The Suits Valuation Act 1887, and other relevant laws of the center or States. These papers are used to collect court fees and are mainly used for legal and court work. In most cases, parties have to pay court fees through judicial stamp papers to avoid cash transactions and to meet the day-to-day expenses incurred by the court.

Types of Judicial Stamp Papers

Judicial stamp papers can be used in several types of situations, including:

Suits for Movable Property with No Market Value: For example, title-related documents, sale deeds, etc. Enforcement of the Right to Joint Family Ownership: Particularly in cases like entitling rights in partitions of undivided Hindu Families, partition deeds. Memoraneous and Decrees: To obtain a proclamation or decree when subsequent relief is granted in court. Temporary Injunctions: To obtain a temporary order. Easements: Rights that arise out of the land. On the Accounts: Calculated on the amount at which the claim for relief is calculated on the plaint or in the memorandum of appeal. Financial Suits: Including damages or compensation, arrears or other periodic amounts – for the amount claimed. Maintenance and Other Legal Items: In maintenance suits or other amounts paid from time to time – depending on the value of the suit filed, where that amount will be estimated to be ten times more than the amount claimed next year. Suits for Movable Property with Market Value: In cases where the title may have a market value – depending on that value at the date of the appeal.

Which Entities Can Enact Stamp Laws According to the Indian Constitution?

The Constitution of India empowers Parliament and the State Legislature to make arrangements and rules for the operation of stamps within their territories. The Indian Stamps Act 1899 is the Central Legislation, and the States have their own stamp acts within the jurisdiction of that particular state.

Stamp papers are covered in the VII Schedule of the Indian Constitution. Entry 91 of List I (Union List) of the Constitution of India states, "Rate of the 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." Entry 63 of List II (State List) states, "Rate of the stamp duty in respect of documents other than those specified in the provisions of List I with regard to rates of stamp duty." Entry 44 of List III (Concurrent List) covers "stamp duties other than duties or fees collected through judicial stamps but not including rates of stamp duty."