Q.Why is no stamp duty payable on the transmission of shares, unlike on a transfer?

Stamp duty is a tax on transactions of value, and this is exactly the feature transmission lacks.

Stamp duty, under the Indian Stamp Act, 1899 and the notifications made under it, is essentially a tax levied on specific kinds of documents that record a transaction of value — most importantly, an instrument transferring property from one person to another for consideration. A transfer of shares fits this description precisely: the transferor gives up his shares, the transferee usually pays a price for them, and the instrument of transfer (Form SH-4) that records this exchange is, correspondingly, chargeable to stamp duty at the rate notified for transfer of securities.

Transmission, however, is a fundamentally different kind of event. When shares pass on the death, insolvency, or lunacy of a member, or on the winding up of a corporate member, there is:

• no sale — nobody is buying the shares;
• no exchange — nothing of value is being given in return for them; and
• no fresh transaction at all — the shares, in substance, already belonged to the deceased/insolvent member's estate, and the applicant (legal representative, Official Assignee, guardian, or liquidator) is simply asking the company to formally recognise who is now entitled to deal with that pre-existing property. …

A common mistake is assuming stamp duty is simply 'waived' for transmission as a matter of administrative concession — in fact, no duty arises in the first place, because transmissio …