According to Blackes Law Dictionary[1], stamp duty means an additional tax levied on certain legal documents by purchasing a stamp to be affixed to this document. The above definition excludes that a stamp duty is a tax, that it may be fixed or variable (depending on the legal form) that is applied to certain legal documents, so that the right may exclude certain documents from stamp and stamp duty paid by the purchase of a stamp and not by other means. Stamp duty is mandatory for securities and bonds issued with credits. While this is not necessary with respect to trade agreements, its inclusion was necessary. Traditionally, parties are required to purchase stamp paper from stamp sellers or to frenchize the document. However, in 2008, the Karnataka government, in collaboration with the Holding Company of India Limited (“SHCIL”), implemented a simpler and more practical method to combat and prevent fraudulent practices in the registration and transaction of branded paper, by electronicallyaving stamp paper and paying the corresponding stamp tax online via its website, www.shcilestamp.com. SHCIL has also designated authorized collection points (“ACC”) that can issue electronic stamp paper to users at their respective outlets or at banks, for a fee. The Karnataka government has taken proactive steps to facilitate online stamping and registration obligations in order to demonstrate to its residents. Companies can use the above methods to continue their business in the current scenario using electronic stamping services and online registration services. The physical transfer of ownership is not considered valid in the eyes of the law. To validate such a real estate transaction, the buyer must pay stamp duty, as proof of the purchase has been provided. Stamp duty is therefore the tax paid by the state at the time of the real estate transaction and has the transfer certificate properly kept in court.

Stamp duty will be paid by the parties to an agreement to a state government for the recognition of an agreement. Stamp duty is an income for the state government, even if it is imposed by the central government (as has been discussed in some instruments as above). The national governments concerned have the power to seize or cancel the effect of an agreement if such an agreement is not sufficiently marked. Below is a list of transactions that must be stamped: documents that are not to be registered but must pay stamp duty under the Indian Contract Act of 1872, an agreement is valid and can be applied if it meets the conditions of a valid contract, i.e. offer and acceptance, free consent, legitimate purpose, contractual and jurisdictional capacity, legal consideration and legal purpose. Electronic contracts are contracts entered into through a type of electronic communications such as e-mail, internet and fax and Section 10A of the Information Technology Act, 2000 (“Information Technology Act”), confirms the validity and applicability of these contracts. The electronic agreement after execution is stored/registered by the exporting parties in electronic form and is considered an electronic stolisation under the Information Technology Act. Indian courts recognize the probative value of electronic records under Section 65B of the Indian Data Information Act, 1872 (“Evidence Act”). Any offence related to non-payment of stamp duty or falsification of stamps is an offence under the CPI.

The payment of stamp duty is made with a monthly penalty ranging from 2% to 200% of the total amount.