GST on Stamp Duty

[Narayan Pujar]

Hello,

From my limited research I understand that GST is not applicable on Stamp Duty and the prominent arguments taken are -

1. It is a tax not a service.

2. It is exempt under SI. No 47 of NN 12/2017

For better understanding whether GST is applicable on stamp duty or not, I would like to invite views on following points -

1. Stamp duty is essentially paid to State to validate certain documents to hold them good in law. Definition of services under GST is so vast, can it not cover activity for which stamp duty is collected?

2. Section 15(2)(b) includes 'duties' also for valuation, so can we say here that Govt's intention was to cover stamp duty also?

3. SI. No 47 of NN 12/ 2017 covers only 'service of registration under any law' which is essentially collected under 'The Registration Act'. But stamp duty is collected by states under states stamp act, e.g., 'Maharashtra Stamp Act'. How can it be said that stamp duty is covered by the exemption?

4. Any other arguments for and against applying GST on stamp duty?

Thank you in advance!

[KASTURI SETHI]

The following circular can be useful to you :-

Tenancy rights taxability under GST — Clarification

Circular No. 44/18/2018-CGST, dated 2-5-2018

 

[KASTURI SETHI]

Stamp duty is the liability of the buyer.

[KASTURI SETHI]

Read serial no.4 of Circular F. No. 354/32/2019-TRU, dated 14-5-2019.

[KASTURI SETHI]

 The query-wise reply is as under :-

 1. It is a tax not a service.

 My view : Yes, Stamp Duty is a tax and NOT service.

2. It is exempt under SI. No 47 of NN 12/2017.

My view : Only registration is exempted and NOT Stamp Duty. Under Section 15 (2) (a) of CGST Act, no such deduction is allowed from transaction value.

3. Stamp duty is essentially paid to State to validate certain documents to hold them good in law. Definition of services under GST is so vast, can it not cover activity for which stamp duty is collected ?

My view : Yes. It can cover. The activity of registration is covered.

4. Section 15(2)(b) includes "duties" also for valuation, so can we say here that Govt's intention was to cover stamp duty also ?

My view : Yes

5. SI. No 47 of NN 12/2017 covers only "service of registration under any law" which is essentially collected under "The Registration Act". But stamp duty is collected by states under states stamp act, e.g., "Maharashtra Stamp Act". How can it be said that stamp duty is covered by the exemption ?

My view : This notification is not applicable here inasmuch as technically and literally "means" and "ends" are two different concepts with their different meaning, sense and message. Stamp Duty is ''means'' in this scenario and registration is the object. As per the Notification, only registration is exempted from registration under any law for the time being in force. Serial no. 47 of the notification does not find the word, 'Stamp Duty'

6. Any other arguments for and against applying GST on stamp duty ?

My view : If the supplier collects Stamp Duty from the buyer and deposits with the State Government, he is performing this activity for and on behalf of the buyer. In that situation, the concept of 'pure agent' will come into play subject to the conditions laid down in Rule 33 of CGST Rules.

[Narayan Pujar]

Sir, thank you for your views! Great help!

AI Summary

GST applicability on stamp duty: treated as a tax not a service, registration exemption doesn't cover stamp duty. Stamp duty is a tax, not a service, and the exemption for 'service of registration under any law' does not expressly include stamp duty collected under State Stamp Acts. Registration activity may be a service covered by the exemption, but stamp duty remains distinct. Duties are included for valuation purposes under GST valuation rules, yet that inclusion does not automatically render stamp duty an exempt service. If a supplier collects stamp duty on behalf of a buyer and remits it to the State, the collection may qualify as a pure agent arrangement subject to the GST rules governing agentive recoveries.