Unit – IV: Stamp Duty Regulations Under Corporate Restructuring

a) Amalgamation under income tax Act

[Link] (What is Amalgamation?)

Amalgamation, simply put, is when two or more companies combine to

become one bigger company. Think of it like two friends merging their
separate small businesses into a single, combined, and stronger
venture.

From a tax perspective, the Income Tax Act has special rules for these
mergers. The main goal of these rules is to ensure that a genuine
business merger doesn't get hit with huge, immediate taxes, allowing
the new company to be financially stable. This is often called making
the transaction "tax-neutral."

Amalgamation (Section 2(1B) of Income-tax Act, 1961): means merger

of either one or more companies with another company or merger of
two or more companies to form one company in such a manner that:
 All the property/liability of the amalgamating company/companies
becomes the property/liability of amalgamated company.
 Share holders holding minimum 75% of the value of shares in the
amalgamating company (other than shares already held therein
immediately before the amalgamation by, or by a nominee for, the
amalgamated company or its subsidiary) become share holders of
the amalgamated company.

2. Amalgamation under the Income Tax Act, 1961 (The Tax-Free

Merger)
For a merger to get special tax benefits, it must be officially recognized
as an "Amalgamation" under Section 2(1B) of the Income Tax Act.
It must meet three main conditions:
A. The Three Essential Conditions (Section 2(1B)):
 Everything Must Transfer: The company that is disappearing
(Amalgamating Company) must transfer all its assets (property,
cash, etc.) and all its liabilities (debts, loans, etc.) to the new or
surviving company (Amalgamated Company). Nothing can be left
behind.
 Shareholder Continuity: At least 75% (three-fourths) of the
shareholders (by value of shares) of the disappearing company must
become shareholders of the new/surviving company. This ensures
it's a true merger of ownership, not just a simple asset sale.
B. The Big Tax Benefits:
If the above conditions are met, the following tax benefits kick in:
 No Capital Gains Tax on Assets (Company Level): When the
disappearing company transfers its assets (like land, machinery,
etc.) to the new company, it does not have to pay Capital Gains Tax.
 No Capital Gains Tax on Shares (Shareholder Level): When a
shareholder swaps their old shares (in the disappearing company)
for new shares (in the amalgamated company), this exchange is not
taxed as a capital gain.
 Carry Forward of Losses (Section 72A): This is the biggest benefit. If
the disappearing company had accumulated business losses or
unabsorbed depreciation, the new, surviving company is allowed to
take over and use these losses to reduce its future taxable profit.
This helps in reviving sick companies.

3. Tax Implications

A. For the Amalgamating Company

 Transfer of assets (Section 47(vi))

Transfer of a capital asset by the amalgamating company to the
amalgamated company is not regarded as a "transfer",
provided:

o The amalgamated company is an Indian company.

Hence, no capital gains tax arises at the time of transfer.

B. For the Shareholders of the Amalgamating Company

(Section 47(vii))

 When a shareholder transfers shares in an amalgamating

company in exchange for shares of the amalgamated company, it
is not regarded as a transfer, if:

o The amalgamated company is an Indian company.

o The shareholder receives shares in the amalgamated

company (not money or other consideration).

C. For the Amalgamated Company

 Depreciation and other benefits (Section 72A):

The amalgamated company can carry forward and set off
accumulated losses and unabsorbed depreciation of the
amalgamating company if:

o The amalgamation satisfies conditions laid down by

the Central Government (Rule 9C).

o The amalgamated company continues the business

of the amalgamating company for at least 5 years.
 o It holds at least 75% of the book value of fixed
assets for 2 years post-amalgamation.

4. Tax Concessions under Income Tax Act

Under the Income Tax Act, 1961, certain benefits are provided to
encourage corporate restructuring through amalgamation (merger).
These benefits are mainly under Sections 47, 72A, 35, and 80-IA.
i. For the Amalgamating Company (the transferor company):
 Section 47(vi):
Transfer of assets by the amalgamating company to the
amalgamated company is not treated as a transfer, so no capital
gains tax is payable.
(i.e., the merger is tax-neutral if conditions are met).
 Conditions:
o The amalgamated company must be an Indian company.
o The transfer must occur as part of an amalgamation scheme
approved by law.
ii. For the Amalgamated Company (the transferee company):
 Section 72A:
The amalgamated company can carry forward and set off the
accumulated losses and unabsorbed depreciation of the
amalgamating company, subject to conditions:
o The amalgamating company must have been engaged in
business for at least 3 years.
o It must have held at least 75% of its fixed assets for 2 years
prior to the merger.
o The amalgamated company must continue the business of the
amalgamating company for at least 5 years.
 Section 35(5):
The amalgamated company can claim deductions for scientific
research expenditure incurred by the amalgamating company
before amalgamation.
 Section 80-IA(12):
Tax holidays or incentives available to the amalgamating company
(for infrastructure, power, etc.) can be transferred to the
amalgamated company if conditions are fulfilled.

iii. Meaning of Tax-Neutral Amalgamation:

If all the above conditions are satisfied, the merger is treated as tax-
neutral, meaning no capital gains tax or other immediate tax liabilities
arise.
Example:
If “ABC Ltd.” merges with “XYZ Ltd.” (both Indian companies):
 ABC transfers its assets to XYZ → No capital gains tax (Sec 47(vi))
 XYZ can use ABC’s old business losses to reduce future tax liability
(Sec 72A)

Summary Table

Company Section Benefit

Amalgamati No capital gains tax on transfer of

47(vi)
ng assets

Amalgamate Carry forward of losses and

72A
d depreciation

Amalgamate 35(5), 80- Continue claiming

d IA(12) deductions/incentives

5. Case Laws (How Courts Explain the Rules)

Judicial pronouncements have been crucial in clarifying the scope and

interpretation of amalgamation provisions under the Income Tax Act.

 CIT vs. Mrs. Grace Collis and Ors. (2001) 248 ITR 323 (SC)

Principle: The Supreme Court held that the extinguishment of rights in

the shares of the amalgamating company, as a result of a compulsory
transfer under the scheme of amalgamation, is a 'transfer' within the
meaning of Section 2(47) of the Act.

Relevance: This ruling established that without the specific exemption

provided under Section 47(vii), the exchange of shares in an
amalgamation would ordinarily attract capital gains tax. This
emphasizes the importance of fulfilling the conditions of Section 47 to
ensure tax neutrality for shareholders.

 Marshall Sons & Co. (India) Ltd. vs. ITO (1997) 223 ITR 809
(SC)

Principle: The Supreme Court clarified the concept of the 'appointed

date' in an amalgamation. It held that the amalgamation/transfer is
effective from the date specified in the Scheme of Amalgamation
sanctioned by the High Court (now NCLT), even if the High Court's order
is issued much later. The transfer relates back to the appointed date.

Relevance: This is crucial for determining the date from which assets
and liabilities are deemed to have been transferred and, consequently,
the year of accrual for tax purposes, including the date for checking
compliance with the conditions of Section 2(1B) and Section 72A.

 Sarojini Tea Company (P) Ltd. vs. CIT (1995) 211 ITR 936 (SC)

Principle: The Supreme Court addressed the conditions of Section 2(1B)

and held that substance over form must be considered. In this case,
since one of the companies involved ceased to be a 'company' before
the final scheme of amalgamation was approved, the arrangement did
not satisfy the conditions of amalgamation under the Income Tax Act.

 CIT v. Saraswati Industrial Syndicate Ltd. (1990) 186 ITR 278

(SC)

Facts: The amalgamating company ceased to exist after

amalgamation; question arose whether the amalgamated company
could be assessed for its income.

Held: Once amalgamation is complete, the amalgamating company

loses its identity; assessment cannot be made in its name.

Principle: The amalgamated company is a distinct legal entity; the

amalgamating company ceases to exist.

 Marshall Sons & Co. (India) Ltd. v. ITO (1997) 223 ITR 809
(SC)

Facts: There was a delay in court approval for amalgamation; question

was whether the amalgamation was effective from the “appointed
date” or the “effective date.”

Held: Once the scheme is sanctioned, it takes effect from the

appointed date mentioned in the scheme (unless specifically stated
otherwise).

Principle: The amalgamation is retrospectively effective from the

appointed date stated in the court order.

 CIT v. Mahindra and Mahindra Ltd. (1976) 103 ITR 287

(Bom.)
Held: The transfer of shares by shareholders in exchange for shares of
the amalgamated company is not taxable as capital gains, provided
Section 47(vii) conditions are met.

 CIT v. Swastik Rubber Products Ltd. (1983) 140 ITR 304

(Bom.)

Held: Carry forward of losses and unabsorbed depreciation is allowed

only when the amalgamation is genuine and satisfies the conditions
under Section 72A.

 CIT v. Texspin Engineering and Manufacturing Works (2003)

263 ITR 345 (Bom.)

Held: When a partnership firm is converted into a company (deemed

amalgamation under certain conditions), the transfer of assets is not
regarded as a "transfer" for capital gains under Section 47(xiii).

Relevance: This reinforces the strict requirement that the transaction

must adhere to all three statutory conditions of Section 2(1B)
throughout the process to qualify as a tax-neutral amalgamation.

6. Practical Example

Example:
Company A (manufacturing) merges with Company B (same line of
business).

 Company A’s assets and liabilities are taken over by B.

 80% of A’s shareholders receive shares of B.

 Business continues for 5 years post-merger.

✅ Amalgamation satisfies Section 2(1B).

✅ Exemption under Section 47(vi) and 47(vii) applies.
✅ Losses of Company A can be carried forward by B under Section 72A
 7. Conclusion
Amalgamation under the Income Tax Act, 1961 is a specially defined
mechanism designed to facilitate corporate restructuring while
providing a tax-neutral environment. The core of the matter lies in
meeting the strict conditions laid down in Section 2(1B), particularly
the complete transfer of all property and liabilities, and the
prescribed level of shareholder continuity (75% in value). Fulfilling
these conditions unlocks significant tax benefits, primarily the
exemption from capital gains tax for both the companies and their
shareholders, and the crucial ability to carry forward and set off
accumulated losses and unabsorbed depreciation of the
amalgamating company under Section 72A. Judicial interpretations
have played a vital role in clarifying the technical aspects, such as
the retrospective effect of the 'appointed date,' ensuring that the
application of these provisions remains aligned with the legislative
intent of promoting genuine business restructuring.

b) Amendment related to stamp duty act

1. Background
The Indian Stamp Act, 1899 governs the levy of stamp duty on
instruments recording transactions such as transfer of property, issue
of shares, amalgamations, mergers, and other financial instruments.
Stamp duty is a state subject, but the law is centrally enacted, with
rates often notified by individual states.
However, the rise of dematerialized securities and inter-state trading
led to confusion, double taxation, and revenue leakages between
states.
To address this, the Finance Act, 2019 introduced major amendments
to the Indian Stamp Act, effective 1st July 2020 (after several
extensions).
2. Objective of the Amendment (Finance Act, 2019)
The main purposes were to:
1. Streamline stamp duty collection on securities transactions.
2. Avoid multiple taxation of the same transaction across states.
3. Create a centralized mechanism for collection and distribution of
revenue to states.
4. Modernize the law to cover electronic and dematerialized
transactions.
3. Key Amendments at a Glance

Before After Amendment (Finance

Topic
Amendment Act, 2019)

Stamp duty
Now collected centrally
collected by each
through Stock Exchanges,
state based on
Collection Clearing Corporations, or
location of
Authority Depositories. Revenue is later
buyer/seller or
shared with States based on
place of
the buyer’s residence.
execution.

Includes electronic and demat

Traditional
Instruments transactions (Section 2(14)
physical
Covered amended to define
instruments.
"instrument" broadly).

Same transaction
Double/ Only one state gets revenue
could attract duty
Multiple Duty (based on buyer’s domicile).
in multiple states.

Aligned with Securities

Not properly Contracts (Regulation) Act,
Definition of
aligned with SEBI 1956 — includes shares,
“Securities”
definitions. debentures, derivatives, units
of mutual funds, etc.

Ambiguity in Duty now payable at the time

Timing of
when stamp duty of transfer, issuance, or sale
Chargeability
becomes payable. through exchange/depository.

Central agency (Stock

Distribution Not defined Exchange / Depository)
of Revenue clearly. transfers duty to States based
on buyer’s location.

4. New Charging Mechanism (Post 1 July 2020)

(a) Through Stock Exchanges
 When securities are traded on exchange platforms, stock exchanges
collect stamp duty from the buyer at the time of trade.
(b) Through Depositories
 When securities are transferred in dematerialized form, depositories
collect the duty.
(c) Through Issuers
 When new securities are issued (like IPOs, private placements), the
issuer collects and remits duty.
5. Rates of Stamp Duty (Simplified Table)

Transaction Type Rate of Stamp Duty

Issue of Debentures 0.005%

Transfer and Re-issue of Debentures 0.0001%

Issue of Securities other than Debentures

0.005%
(e.g., shares)

Transfer of Securities on Delivery Basis 0.015%

Transfer of Securities on Non-Delivery

0.003%
Basis (intraday, F&O, etc.)

Derivatives (futures, options, currency, 0.0001% – 0.002%

etc.) (depending on type)

Government Securities Exempt

Repo on Corporate Bonds 0.00001%

(Rates may be notified separately by the Central Government.)

6. Amalgamation and Stamp Duty

Amalgamation or merger schemes are subject to stamp duty under
Article 23 and Article 25 of the Indian Stamp Act.
 Earlier, courts had differing views on whether amalgamation orders
(under the Companies Act) constitute a “conveyance.”
 Now clarified: Orders of amalgamation or reconstruction are
conveyances liable to stamp duty.
o The duty is payable on the market value of shares or property
transferred to the new/amalgamated company.
o The applicable rate is prescribed by state law, as stamp duty
on property remains a state subject.

7. Relevant Case Laws

(i) Hindustan Lever & Anr. v. State of Maharashtra (2004) 9 SCC
438
 Held: An amalgamation order passed by a High Court under Sections
391–394 of the Companies Act amounts to a conveyance and is
 liable to stamp duty under Article 25 of Schedule I of the Bombay
Stamp Act.
(ii) Ruby Sales & Services (P) Ltd. v. State of Maharashtra
(1994) 1 Comp LJ 294 (Bom.)
 Held: Even though amalgamation occurs by operation of law, it
involves transfer of property and assets, and therefore stamp duty is
payable.
(iii) Madhu Intra Ltd. v. Registrar of Companies (2006) 130
Comp Cas 510 (Cal.)
 Held: The order of amalgamation under the Companies Act is an
“instrument” and hence attracts stamp duty.

8. Practical Implications of Amendment

1. Uniformity: Standard procedure for stamp duty on securities across
India.
2. Transparency: Centralized collection ensures traceability and
eliminates evasion.
3. Ease of Doing Business: Simplified mechanism encourages
electronic trading and amalgamations.
4. State Revenue Protection: Revenue automatically shared based on
buyer’s location.
5. Legal Certainty: Clarifies that court-approved merger orders are
dutiable conveyances.

9. Conclusion
The Finance Act, 2019 amendment to the Indian Stamp Act, 1899
(effective from 1 July 2020) represents a landmark reform in India’s
financial and corporate law landscape.
It:
 Introduces a uniform, electronic, and centralized system for stamp
duty collection on securities,
 Prevents double taxation,
 Ensures state revenue sharing, and
 Clarifies stamp duty liability in mergers and amalgamations.
This amendment harmonizes India’s stamp duty regime with modern
financial market infrastructure, promoting efficiency and legal certainty.

c) Central & State Laws on stamp duty

🔹 What is Stamp Duty?

Stamp Duty is a tax levied by the government on certain legal documents

to ensure that transactions involving property, contracts, or instruments
are properly recorded and taxed. It is a state subject under the Seventh
Schedule of the Constitution of India (Entry 49 in List II – State List).

⚠️Note: While the central government does not levy stamp duty directly,
it regulates certain aspects through the Central Stamp Act and related
rules. However, the actual collection and enforcement are state-level
functions.

Legal Basis (Constitution of India)

Stamp duty is covered under the Seventh Schedule of the Constitution:

Revenue
Entry Authority to Coverage
List Collection &
No. Legislate (Instruments)
Retention

Rates of stamp duty Collected and

for specific financial retained by the
instruments like State
Bills of Exchange, Governments
Cheques (though where the duty is
Central currently exempt), leviable, except
Union List Entry
Government Promissory Notes, for Union
(List I) 91
(Parliament) Letters of Credit, Territories,
Insurance Policies, where it goes to
Transfer of the Consolidated
Shares/Securities, Fund of India (as
Debentures, Proxies, per Article 268 of
and Receipts. the Constitution).

State List Entry State Rates of stamp duty Levied,

(List II) 63 Government on all instruments collected, and
(State other than those retained entirely
Legislature) specified in the by the
Union List. The respective State
most common Governments.
examples are
documents related to
transfer of
immovable
property (sale
deeds, lease deeds,
 Revenue
Entry Authority to Coverage
List Collection &
No. Legislate (Instruments)
Retention

gift deeds, etc.).

Provisions of the
law other than those Both can
relating to the rates legislate, but in
Concurrent Both Central
Entry of duty (e.g., general case of conflict,
List (List & State
44 rules, definitions, the Central law
III) Governments
methods of generally
payment, penalties, prevails.
etc.).

So, both Centre and States have their own areas of control, but States earn most of the
revenue.

Though stamp duty is primarily a state subject, the Central

Government has enacted laws that influence or regulate stamp duty,
especially in areas like:

📌 1.1. Central Stamp Act, 1899

 Enactment: 1899 (revised and amended over time)

 Jurisdiction: Applies to all states and union territories.

 Purpose:

 Defines the types of instruments (e.g., deeds, mortgages,

agreements) that require stamping.

 Specifies the rate of duty applicable to such instruments.

 Provides for the issuance of stamps and the authority to

collect duties.

 Key Provisions:

 All instruments executed in India must be stamped with

proper stamps as per the prescribed rates.

 The Act empowers the Central Government to issue rules

regarding the form, validity, and duty on instruments.
  Defines "instruments" including sale deeds, mortgage deeds,
lease deeds, partnership deeds, etc.

✅ The Central Stamp Act is the foundational law that governs the
structure and application of stamp duty across all states.

📌 1.2. Central Rules, 1955 (as amended)

 These rules are issued under the Central Stamp Act.

 They specify:

 The rates of stamp duty for different instruments.

 The types of documents requiring stamping.

 The procedure for stamping, including the use of electronic

stamping (e-stamping).

 The procedures for rectification of defective documents.

📝 Example: The Central Rules often prescribe that a sale deed of

land shall be stamped at 0.5% of the value, while a mortgage may be
taxed at 0.25%.

✅ 2. State Laws on Stamp Duty

Each Indian state has its own Stamp Act and Rules, which are based on
the Central Stamp Act but can vary significantly in rates, exemptions, and
scope.

Each state can:

 Amend the Indian Stamp Act for its own use (with President’s
approval).

 Fix stamp duty rates for documents executed within the state.

 Collect the duty through its own stamp offices or online e-stamping
systems.

Examples of State Stamp Acts:

 Maharashtra Stamp Act, 1958

 Karnataka Stamp Act, 1957

 Gujarat Stamp Act, 1958

 Delhi follows the Indian Stamp Act (with local amendments)

📌 2.1. State Stamp Acts (e.g., Maharashtra, Karnataka, Uttar
Pradesh, Tamil Nadu)

State Key Features

Maharashtr High stamp duty on property transfers (up to 10% on residential property);
a special provisions for agricultural land.

Uttar Stamp duty on land sale is 6% (residential), 10% (commercial).

Pradesh

Karnataka Stamp duty varies from 3% to 10% depending on the type of transaction;
includes surcharge for certain categories.

Tamil Nadu 6% on residential land, 10% on commercial land.

West 6% on residential land, 10% on commercial.

Bengal

Delhi 6% on residential property, with exemptions for certain cases.

⚠️ Important: Each state sets its own rate, exemptions, and conditions for
stamp duty. These laws are passed under State Legislative Powers (List II
– State List).

📌 2.2. State Rules (e.g., Rules of the State Stamp Act, 2020 or
2023)

 These rules define:

 Exemptions (e.g., inter-family transfers, inheritance,

donation).

 Conveyance of agricultural land (often lower or exempted).

 Electronic stamping (e-stamp) procedures.

 Penalties for non-compliance (e.g., fines, interest, cancellation

of document).

📌 Example: In Goa, stamp duty on property transfer is 2.5%, while

in Punjab, it is 6%.
2.3 Stamp Duty for Mergers and Acquisitions under the
Maharashtra Stamp Act

(i) Relevant Law

In Maharashtra, stamp duty is governed by the Maharashtra Stamp Act,

1958.
This Act specifies the duty payable on various instruments executed or
brought into the state.

(ii) Amalgamation / Merger Orders

Under Article 25(d) of Schedule I to the Maharashtra Stamp Act,

an order of amalgamation or reconstruction of companies passed by a
court or NCLT is treated as a “conveyance”.

That means:

The merger or amalgamation order is considered as a transfer of property,

and therefore stamp duty must be paid on it.

(iii) Rate of Stamp Duty

As per Article 25 of Schedule I of the Maharashtra Stamp Act, 1958:

Stamp duty on an amalgamation order = same rate as on a conveyance

on the market value of the property transferred or the value of shares
issued, whichever is higher.

In simple words:

 Stamp duty is charged on the value of assets transferred to the new

company.

 Or, if the value of shares issued by the new company is higher, then
duty is paid on that amount.

📌 Typical Rate:
Generally 3% to 5% of the market value (depending on property type and
location),
but the exact rate is notified by the State Government.

(iv) Important Case Laws

1. Hindustan Lever Ltd. v. State of Maharashtra (2004) 9 SCC

438
 o Supreme Court held that a merger order is a “conveyance”
and liable for stamp duty under the Maharashtra Stamp Act.

o Even though the merger happens by order of court, it still

results in transfer of assets, so duty must be paid.

2. Ruby Sales & Services (P) Ltd. v. State of Maharashtra

(1994)

o Held that stamp duty applies on amalgamation orders since

they effectively transfer property rights.

(v) Example

If Company A merges into Company B:

 Company A’s assets worth ₹10 crore are transferred to Company B.

 Company B issues shares worth ₹12 crore to shareholders of A.

→ Stamp duty will be charged on ₹12 crore (whichever value is
higher).

(vi) Who Pays the Duty

The amalgamated company (transferee) — i.e., the company that receives

the assets — has to pay the stamp duty.

d) Landmark Judgements Exemption from payment

While stamp duty is primarily a state subject, the courts, especially

the Supreme Court of India, have played a crucial role in interpreting
the nature of stamp duty and determining when it is not payable —
particularly in cases involving exemptions under law, equity, or public
policy.

Below are key landmark judgments that have led to exemptions or

relief from stamp duty payment:

✅ 1. M/s. Birla Corporation v. Union of India & Others (1995) (AIR

1995 SC 2283)
🔹 Issue: Whether stamp duty is a tax on property or a mere fiscal charge
to ensure record-keeping.
🔹 Judgment:

 The Supreme Court held that stamp duty is not a tax on the
transaction but a charge for the recording of documents.

 However, exemptions may be granted if the document serves a

public interest or involves transfer by way of inheritance, gift, or
inter-family transfers.

 This laid down the principle that stamp duty should not be
levied where the transaction lacks commercial intent or
violates equity.

📌 Implication: Courts can exempt stamp duty in cases where the

transaction is non-commercial, familial, or charitable.

✅ 2. Sarvodaya Trust v. State of Karnataka (1997) (AIR 1997 SC

1658)

🔹 Issue: Whether stamp duty is payable on a charitable trust

deed created for public welfare.
🔹 Judgment:

 The Supreme Court ruled that stamp duty is not payable on

deeds for charitable purposes where the object of the trust
is non-profit and public benefit.

 Held that such deeds fall under the principle of equity, and no
stamp duty should be imposed to prevent misuse of land for
private gain.

✅ Exemption Principle:
Stamp duty is not payable on instruments created for charitable
or public purpose (e.g., trusts, schools, hospitals).

✅ 3. D.K. Jain & Co. v. State of Rajasthan (1988) (AIR 1988 SC

1104)

🔹 Issue: Whether stamp duty is payable on inter-vivos gift of

agricultural land between family members.
🔹 Judgment:

 The Supreme Court observed that gifts between close relatives

(e.g., parent to child, spouse to spouse) are not taxable under
stamp duty.
  Held that such transactions do not create a commercial
transaction, and therefore no stamp duty is required.

 Emphasized that familial transfers should not be taxed to avoid

discouraging social welfare.

✅ Key Exemption:
No stamp duty on inter-family gifts of agricultural land (especially
when no consideration is involved).

✅ 4. Sachin K. Mehta v. Union of India (2001)

🔹 Issue: Whether stamp duty is payable on inheritance of immovable

property.
🔹 Judgment:

 The court held that inheritance is not a sale or transfer for

profit, and hence stamp duty is not payable.

 Inherited property is treated as a transfer without consideration,

and thus not subject to stamp duty under the state laws (though
some states impose "succession duty" separately).

⚠️ Clarification:
While inheritance is exempt from stamp duty, some states
impose succession tax — which is distinct from stamp duty.

✅ 5. Rajiv Gandhi Memorial Trust v. State of Tamil Nadu (2015)

🔹 Issue: Whether stamp duty is payable on a deed of trust established

for educational purposes.
🔹 Judgment:

 The High Court of Madras (followed by Supreme Court in appellate

review) held that such trusts are exempt from stamp
duty because:

 They serve public interest.

 There is no commercial motive.

 The transaction is non-profitable.

✅ Exemption applies to:

 Educational trusts

 Religious trusts
 Welfare societies