Amendments to Maharashtra Stamp Act: Increase in the ceiling on stamp duty for security

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Amendment to Article 6 of Schedule I: The 2021 Amendment Act has increased the existing ceiling of stamp duty payable on an agreement relating to deposit of title deeds, pawn, pledge or hypothecation where the amount secured exceeds INR 5 lakhs, from INR 10 lakhs to INR 20 lakhs. This has been done by amending column (2) of Article 6(1)(b) and Article 6(2)(b). As stated above, the increase of stamp duty by twice the amount of the maximum duty payable prior to the 2021 Amendment Act has been made to accommodate the revenue deficit pursuant to the Maharashtra Stamp (Amendment and Validation) Act, 2021.

Further, a proviso has been added in column (2) of Article 6(1)(b) and Article 6(2)(b) to the effect that in case of instrument executed in favour of consortium of banks, the duty chargeable shall not exceed INR 50 lakhs. To provide some context, pursuant to the judgment of the Hon’ble Supreme Court of India in the matter of Chief Controlling Revenue Authority v Coastal Gujarat Power Limited (Civil Appeal No. 6054 of 2015) dated 11 August 2015 (Coastal Gujarat Judgment), execution of documents by a company with every bank or financial institution was treated as a ‘distinct matter’ and ‘distinct transaction’ and hence was required to be stamped accordingly. The provisos put a maximum ceiling of stamp duty of INR 50 lakhs if the instrument creates security in favour of the consortium of banks.

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Amendment to Article 33 of Schedule I: The 2021 Amendment Act has modified the stamp duty payable on instrument imposing a further charge on mortgaged property, where possession of the subject property is not given or agreed to be given, from ‘0.5% of the amount of further charge secured by such instrument subject to the cap of INR 10 lakhs’ to ‘0.3% of the amount of further charge secured by such deed, subject to maximum of INR 20 lakhs, where the amount secured exceeds INR 5 lakhs’. This amendment has effectively aligned Article 33 to Article 40(b) of the Maharashtra Stamp Act, which stipulated stamp duty for mortgage deed.

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Amendment to Article 40(b) of Schedule I:  The 2021 Amendment Act has increased the existing ceiling on stamp duty payable on a mortgage deed (not being, inter alia, an agreement relating to deposit of title deeds, pawn, pledge or hypothecation (under Article 6)), where possession of the subject property is not given or agreed to be given and the amount secured exceeds INR 5 lakhs, from INR 10 lakhs to INR 20 lakhs.

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Amendment to Article 41 of Schedule I: The 2021 Amendment Act has increased the stamp duty payable on mortgage of a crop, whether the crop is or is not in existence at the time of mortgage, from ‘INR 1 for every INR 200 or part thereof’ to ‘0.1% of the amount secured by such deed, subject to the minimum of INR 100 if the amount secured by such deed does not exceed INR 5 lakhs’ and ‘0.3% of the amount of secured by such deed, subject to cap of INR 20 lakhs, where the amount secured exceeds INR 5 lakhs’.

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Amendment to Article 54 of Schedule I: The 2021 Amendment Act has modified the stamp duty payable on a security bond or mortgage deed from ‘0.5% of the amount secured by such deed subject to the cap of INR 10 lakhs’ to ‘0.1% of the amount of secured by such deed, subject to the minimum of INR 100, if the amount secured by such deed does not exceed INR 5 lakhs’ and ‘0.3% of the amount secured by such deed, subject to cap of INR 20 lakhs, where the amount secured exceeds INR 5 lakhs’.