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Introduction
The Maharashtra Stamp (Fourth Amendment) Bill, 2026 (“Bill”) was passed by the Maharashtra Legislative Assembly on 7 July 2026. The Bill proposes to amend Schedule I of the Maharashtra Stamp Act, 1958 (“Act”) to introduce a distinct charging entry for instruments of financial and bank guarantee.
Present Position
Instruments of financial and bank guarantee, are not presently specified as a distinct category the Schedule. Such instruments are presently charged with stamp duty under Article 54 (Security Bond).
Since these instruments are extensively used in commercial transactions by both private parties and the State, the Government considers it necessary to provide a separate Article with differentiated rates for different classes of such instruments.
Currently, when guarantee is extended or renewed, the same stamp duty that is chargeable on the first instrument is levied again, even where the guaranteed amount remains unchanged, resulting in repetitive stamp duty. The proposed amendment, provide relief from repetitive duty on renewals where the amount guaranteed remains unchanged.
Proposed Changes
New Article 34A: The Bill inserts a new Article 34A in Schedule I, which prescribes the following rates of stamp duty:
|
Instrument |
Proposed Stamp Duty |
|---|---|
|
Financial or Bank Guarantee, where the amount secured does not exceed Rs 5,00,000 (Rupees Five lac) |
0.1% of the amount secured, subject to a minimum of Rs 500 (Rupees Five hundred) |
|
Financial or Bank Guarantee, in any other case |
0.3% of the amount secured, subject to a maximum of Rs 20,00,000 (Rupees Twenty Lakh) |
|
Financial or Bank Guarantee issued in favour of a Government Corporation, Local Authority or Statutory Body, in respect of public works or public procurement |
Rs 500 (Rupees Five hundred) |
|
Renewal or extension of an existing financial or bank guarantee, without increase in the guaranteed amount |
0.25% of the amount secured, subject to a maximum of Rs 25,000 (Rupees Twenty-five thousand) |
|
Letter of Guarantee (excluding the instruments above) |
Rs 500 (Rupees Five hundred) |
Implications
Once enacted, the landscape regarding stamp duty on financial and bank guarantees will change significantly. Parties executing or renewing guarantees in Maharashtra should monitor the Amendment closely and assess the stamp duty impact on pending and proposed transactions.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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