Documents, Instruments and Stamping

Stamping of documents in India is governed by the Indian Stamp Act,1899.  This Act is a revenue legislation specially enacted with the aim of raising revenue for the Government.  The Act does not cover the State of Jammu and Kashmir.
instrument,document, deed, stamping

The Indian Stamp Act, 1899 stipulates that each instrument chargeable with the duty must be stamped as prescribed.  The instruments that are subject to stamp duty are described in the Act and the Schedule to the Act.   Schedule I stipulates the stamp duty chargeable on different instruments.

Difference between Document and instrument

Document is defined in the General Clauses Act,1879. According to the definition, document includes any matter written or described upon any substance by means of letters, figures or marks or by more than one of those means, which is intended to be used for the purpose of recording the matter.  The Indian Evidence Act, 1872 also defines document in a similar fashion.  From the definitions, it can be seen that a document is medium of recording a matter. It does not create, transfer or assign any rights or liabilities.

Instrument is defined by the Indian Stamp Act, 1899. According to the Act, an Instrument includes every document by which any right or liability is or purports to be created, transferred, limited, extended, extinguished or recorded.   Thus, an instrument is a writing executed and delivered as the evidence of an act or agreement. Bill of exchanges, bonds, title deeds, leases, mortgages, promissory notes etc are treated as instruments.   An instrument itself forms a legal act and such instruments should be stamped, unless specifically exempted.  For any document to be admitted as an evidence for any purpose, it shall be duly stamped.
All instruments come under the classification of documents, but all documents need not be instruments.  However, it may be noted that many statutes use the terms document and instrument interchangeably.
Why is penalty insisted for non-stamping of instrument?

As mentioned above, the basic premises of enacting the Stamp Act is to generate revenue.  It stipulates penal provisions for violations of any rules, under stamping or non-stamping of  documents.  In the absence of penal provisions, there would have been rampant omissions in stamping of documents. Further, to ensure proper stamping of documents, it is stipulated that a document that is not duly stamped at the time of execution is inadmissible in evidence for any purpose.

There are also some provions to rectify non/under stamping of documents. Certain documents not duly stamped may be permitted in evidence on payment of stamp duty and penalty.  However, position of certain under stamped documents cannot be rectified even by payment of duty and penalty.  A promissory note or bill of exchange not duly stamped at the time of execution cannot be rectified later on.
What is meant by duly stamped?
The term duly stamped in relation to stamping of document / instrument means the duty chargeable and paid in accordance with the law in force at the time of execution of the instrument.  If the instrument was duly stamped at the time of execution, any subsequent change in stamp law does not invalidate the document.
Is any instrument exempted from stamping?

Section 3 together with Schedule I of the Indian the Stamp Act specifies the instruments which are liable to stamp duty.  Instruments which are exempted from duty or not mentioned in the Schedule are not liable to duty. Cheques, demand drafts and bill of exchange drawn payable on demand or at a tenor (subject to certain stipulations) and wills are exempt from stamp duty.  Promissory notes, bill of exchanges   payable otherwise than on demand and other instruments mentioned in Schedule I shall be duly stamped.  Stamp Duty and Stamping of Documents   Types of stamps and stamping methods

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