Stamp Duty on Share Purchase Agreement in Telangana: All You Need to Know
If you intend to buy or sell shares of a company in Telangana, you will need to execute a Share Purchase Agreement (SPA). An SPA is a legal document that sets out the terms and conditions of the sale, including the price, quantity, and other relevant details. However, executing an SPA comes with an added cost, namely, stamp duty.
Stamp duty is a tax levied by the state government on various types of legal documents, including SPAs, deeds, agreements, and conveyances. The stamp duty rates vary from state to state, and Telangana has its own rates.
Stamp Duty Rates in Telangana
In Telangana, the stamp duty payable on an SPA is governed by the Indian Stamp Act, 1899, and the Telangana Stamp Act, 1955. The rates applicable are as follows:
– For individual buyers: 0.1% of the consideration or market value, whichever is higher, subject to a maximum of INR 10,000.
– For companies: 0.5% of the consideration or market value, whichever is higher, subject to a maximum of INR 1 crore.
Note: The consideration refers to the amount of money or other valuables paid or promised to be paid by the buyer to the seller in exchange for the shares.
For example, if you are an individual buying shares worth INR 20 lakh, the stamp duty payable would be INR 20,000 (0.1% of 20 lakh). If a company is buying shares worth INR 5 crore, the stamp duty payable would be INR 25,000 (0.5% of 5 crore, subject to a maximum of INR 1 crore).
When to Pay Stamp Duty on SPAs?
Stamp duty on SPAs must be paid at the time of execution. That is, when both the buyer and the seller sign the agreement and affix the requisite stamp duty. The document must be stamped before or at the time of signing, else it will be considered invalid, and penalties may apply.
Where to Pay Stamp Duty on SPAs?
In Telangana, stamp duty on SPAs can be paid to the government either physically or online. You can purchase the stamp paper from authorized vendors or use the e-stamping facility provided by the Telangana State Government. The e-stamping system is a secure and convenient way to pay stamp duty and generate the stamp certificate online.
Stamp duty is an essential component of executing an SPA in Telangana. It is a tax levied by the government, and the rates vary based on the consideration and the status of the buyer. It is important to pay the stamp duty at the time of execution to avoid penalties and legal issues. By understanding the stamp duty rates and procedures, you can ensure a smooth and hassle-free SPA transaction.