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As per the circular, issued by the Revenue Department of Delhi, dated 29 July 2025 (vide reference number F.10 (166)/COS(HQ)/ STAMP. BR/ 2025/93) (“Circular 1”), companies registered in the National Capital Territory (“NCT”) of Delhi had to pay stamp duty on issuance of shares at the rate of 0.1% of the value of such shares, as prescribed under Article 19 of Schedule 1A of the Indian Stamp Act, 1899 (as applicable in Delhi), since the NCT of Delhi is constitutionally empowered to levy stamp duty on certificates or other documents evidencing the right or title to shares, scrip, or stock in any incorporated company.
Pursuant thereto, the Revenue Department of Delhi has issued another office circular dated 29 September 2025 (vide reference number F.10 (166)/COS(HQ)/ STAMP. BR/ 2025/181) (“Circular 2”) specifically directing National Securities Depository Limited (“NSDL”) and Central Depository Services Limited (“CDSL”) not to collect stamp duty at the lower rate of 0.005% and reaffirming that the rate as applicable in Delhi would apply irrespective of whether shares are issued in physical or demat form.
Circular 2 also underlines that payment of stamp duty on issuance of shares is a statutory obligation under state law, and any non-compliance could result in penalties, interest, and other penal consequences. It highlights that delay or shortfall in remitting the correct duty results in a direct financial loss to the State exchequer, since stamp duty is a critical source of state revenue.
Circular 2 also emphasises that a mechanism for payment of stamp duty on share certificates through Stock Holding Corporation of India Limited (“SHCIL”) remains in place since 2016 and must be used for both physical and dematerialised share certificates.
When considered together, Circular 1 and Circular 2 clearly establish that the Indian Stamp Act, 1899 (as applicable in Delhi) prevails over the lower central rate for share issuance within the NCT of Delhi. Consequently, adjudication and payment of stamp duty at the 0.1% rate is mandatory. Companies operating in Delhi should ensure timely compliance with these directives to avoid the risk of penalties, interest, and regulatory scrutiny.
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