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CS Professional · Drafting, Pleadings and Appearances · Laws relating to Drafting and Conveyancing

Ravi sells 5,000 shares of a listed company to Sunita, and several documents are used in the transaction, including a transfer instrument and a related agreement. Under the sub-section dealing with transfers of securities, which instrument serves as the principal instrument and what happens to the others?

For an issue, sale or transfer of securities, the instrument chargeable under section 9A is the principal instrument, and no stamp duty is charged on any other instrument relating to that transaction. This replaces the usual one-rupee charge on the other instruments.

  1. AThe instrument on which duty is chargeable under section 9A is principal, and no duty is charged on the other instrumentsCorrect
  2. BThe first document signed is principal, and the others bear one rupee each
  3. CThe agreement is principal, and the others bear one rupee each
  4. DEvery instrument bears full duty because securities are excluded from the principal-instrument rule

Explanation

Section 4(3) overrides sub-sections (1) and (2) for issue, sale or transfer of securities. The instrument on which duty is chargeable under section 9A is the principal instrument, and no stamp duty is charged on any other instrument for that transaction. The one-rupee rule does not apply here.

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