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Indian Stamp Act, 1899: Stamp Duty and Instruments

Updated 11 October 2026 · Fact-checked

The Indian Stamp Act, 1899 taxes instruments through stamp duty, at rates set in its Schedules. Section 5 charges an instrument covering several distinct matters with the total of the duties each matter would attract separately. Section 4 charges only the principal instrument when several instruments complete one sale, mortgage or settlement.

Understand Indian Stamp Act, 1899: Stamp Duty and Instruments

Stamp duty is a tax on an instrument (a written document), not on the transaction itself. The Indian Stamp Act, 1899 says which instruments are chargeable and how much duty they carry. The rates sit in the Schedules to the Act. States also amend the rates and some provisions.

Two sections tell you how to count duty when a transaction involves more than one document or more than one subject. Both are favourites for case-based questions.

Section 5 (several distinct matters). If one instrument comprises or relates to several distinct matters, it is chargeable with the aggregate of the duties that separate instruments, each for one matter, would attract. So you cannot save duty by bundling unrelated matters into one document. You split the matters, find the duty on each as if it were a separate instrument, and add.

Section 4 (several instruments, one transaction). Where several instruments are used to complete a sale, mortgage or settlement, only the principal instrument bears the full duty prescribed in Schedule I for the conveyance, mortgage or settlement. Each other instrument bears one rupee instead of its scheduled duty. The parties decide which instrument is principal, but the duty on it must be the highest duty that any of the instruments would have attracted. Some States have changed the one rupee figure. For example, Himachal Pradesh uses two rupees, Orissa ten rupees and Manipur two rupees and fifty paise. Section 4(3) adds that for an issue, sale or transfer of securities, the instrument chargeable under section 9A is the principal instrument and no duty is charged on other instruments for that transaction.

Sale of stamps (section 74). The State Government may make rules regulating the supply and sale of stamps and stamped papers, the persons by whom alone the sale is conducted (stamp vendors), and their duties and remuneration. The proviso says these rules shall not restrict the sale of ten naye paise or five naya paise adhesive stamps.

Stamp duty is different from registration fee. Stamp duty is paid to the State under the Stamp Act to make the instrument valid as evidence. Registration fee is paid under the Registration Act, 1908 to have the document registered. They are separate levies with separate purposes.

Key rules to remember

Section 5: distinct matters: Duty = Duty on matter 1 + Duty on matter 2 + ... + Duty on matter n; Compute each as if it were a separate instrument, then add. Applies to one instrument relating to several distinct matters.
Section 4(1): several instruments, one transaction: Total duty = Schedule I duty on principal instrument + ₹1 × number of other instruments; Only for sale, mortgage or settlement. The ₹1 figure is changed by some States, so check any State given in the question.
Section 4(2): choice of principal instrument: Duty on chosen principal instrument = highest duty chargeable on any of the instruments; Parties choose the principal instrument, but the duty cannot be lower than the highest of the instruments.
Section 4(3): securities: Principal instrument = instrument chargeable under section 9A; duty on other instruments = nil; Applies to issue, sale or transfer of securities.
Section 74: sale of stamps: State Government rules cover: supply and sale; who may sell; duties and remuneration of sellers; Rules cannot restrict sale of ten naye paise or five naya paise adhesive stamps.

How to solve Indian Stamp Act, 1899: Stamp Duty and Instruments questions

Use this order for any question on chargeability, multiple instruments or sale of stamps.

1Identify the instruments in the facts and what each one does.
2Ask whether it is one instrument covering several matters or several instruments for one transaction.
3If one instrument covers several distinct matters, apply section 5: split the matters and add the duties.
4If several instruments complete a sale, mortgage or settlement, apply section 4: fix the principal instrument and charge the others one rupee each.
5Check the proviso to section 4(2): the principal instrument carries the highest duty among them.
6Check for a State amendment or a securities transaction (section 4(3)) before finalising.
7For stamp vendor questions, cite section 74 and the State rules.
8Write the conclusion with the amount and the reason.

Quickest way: Two-question test

When to use it: Use when a case question describes documents and asks for the duty payable.

Ask: one document, many matters? If yes, add separate duties (section 5).
Ask: many documents, one sale, mortgage or settlement? If yes, full duty once plus ₹1 each for the rest (section 4).
Pick the highest-duty instrument as principal if the parties are silent.
Write the rule, the facts, the sum, and the conclusion in that order.

Common mistakes in Indian Stamp Act, 1899: Stamp Duty and Instruments

Charging full duty on every instrument in a single sale.
Students forget section 4 and treat each paper as separate.
Fix: Charge the principal instrument fully and the others one rupee each, unless a State amendment changes the figure.
Applying section 5 to several instruments.
The two sections both deal with multiple items and get mixed up.
Fix: Section 5 is one instrument with several distinct matters. Section 4 is several instruments for one transaction.
Letting parties choose a principal instrument with lower duty.
Students read only section 4(2) first part.
Fix: Remember the proviso: duty on the chosen instrument is the highest duty chargeable on any of them.
Confusing stamp duty with registration fee.
Both are paid when buying property.
Fix: Stamp duty comes from the Stamp Act and validates the instrument as evidence. Registration fee comes from the Registration Act, 1908.
Saying the Central Government makes stamp-sale rules.
The Act is a central law.
Fix: Section 74 gives the rule-making power to the State Government.
Quoting a fixed rupee rate for the duty.
Students memorise one State's rate.
Fix: Rates are in the Schedules and vary by State. Use the figures given in the question.

Worked examples

Example 1

A single deed executed by Mehta Traders Pvt Ltd covers two distinct matters. Matter A would attract ₹5,000 duty and matter B ₹3,000 if each were in a separate instrument. What duty is chargeable on the deed?

Show the solution

The deed is one instrument relating to several distinct matters, so section 5 applies.
Duty is the aggregate of duties on separate instruments for each matter.
Total = ₹5,000 + ₹3,000 = ₹8,000.

Answer: The deed is chargeable with ₹8,000 under section 5.

Example 2

Ravi sells a plot to Sunita using three instruments: a sale deed (duty ₹60,000 if standalone), an agreement (₹2,000) and a supplementary deed (₹1,500). The parties name the sale deed as principal. Assuming a State where the section 4 figure is ₹1, what is the total duty?

Show the solution

Several instruments complete one sale, so section 4(1) applies.
The sale deed carries the highest duty, so naming it as principal satisfies the proviso to section 4(2).
Principal instrument: ₹60,000.
Other two instruments: ₹1 each = ₹2.
Total = ₹60,000 + ₹2 = ₹60,002.

Answer: Total duty is ₹60,002: ₹60,000 on the sale deed and ₹1 on each of the other two instruments.

Exam tips

Begin with the section number and quote the rule in one line, then apply it to the facts.
Show the arithmetic line by line. Marks go to the working.
State clearly whether the question is a section 5 or a section 4 situation before calculating.
Mention State amendments briefly if the question names a State.
Keep stamp duty and registration fee apart in every answer.

Practice questions from Laws relating to Drafting and Conveyancing

Indian Stamp Act, 1899: Stamp Duty and Instruments in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

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Indian Stamp Act, 1899: Stamp Duty and Instruments: frequently asked questions

What does section 5 of the Indian Stamp Act say?

An instrument comprising or relating to several distinct matters is chargeable with the aggregate of the duties that separate instruments, each for one matter, would attract under the Act.

What is the difference between stamp duty and registration fee?

Stamp duty is levied under the Stamp Act on the instrument. Registration fee is charged under the Registration Act, 1908 for registering the document. They are separate payments for separate purposes.

Who makes the rules for sale of stamps?

The State Government under section 74. The rules cover supply and sale of stamps and stamped papers, who may sell them, and the duties and remuneration of those sellers.

How is duty charged when several instruments complete one sale?

Under section 4, only the principal instrument bears the full Schedule I duty. Each other instrument bears one rupee, subject to State amendments. The parties choose the principal instrument, but its duty must be the highest among them.