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CS Professional · Corporate Restructuring, Valuation and Insolvency · Taxation and Stamp Duty Aspects of Corporate Restructuring

Under a scheme of arrangement, Lok Steel Ltd (a Government company) demerges a unit, including its immovable property, to another Government company. Under the Indian Stamp Act, 1899, what is the stamp duty position on the instrument of conveyance?

The instrument is not liable to stamp duty under the Indian Stamp Act, 1899. Section 8G exempts conveyance of a business or immovable property by a Government company to another Government company through demerger or similar scheme of arrangement, notwithstanding anything else in the Act.

  1. ANot liable to duty under the Act, as per section 8GCorrect
  2. BLiable to duty at the full conveyance rate
  3. CLiable to duty only on the immovable property portion
  4. DNot liable only if the transferee is a private company

Explanation

Section 8G provides that an instrument for conveyance or transfer of a business, asset or right in immovable property from a Government company, by way of strategic sale, disinvestment, demerger or other scheme of arrangement, to another Government company, the Central or a State Government, or a development financial institution is not liable to duty. Both parties here are Government companies.

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