E-stamp paper online: when you need it and how it works with e-signing

In India, many agreements must carry stamp duty, a tax on the document itself. For years that meant buying physical stamp paper from a vendor. Most states now offer e-stamping, which is faster and harder to forge. Here is how it fits with signing online.

Which documents need stamp duty?

Stamp duty is set by each state's stamp law (or the Indian Stamp Act, 1899 as adopted by the state). Commonly stamped documents include:

• Rent and lease agreements
• Service, vendor and consultancy agreements in many states
• Loan agreements, guarantees and indemnity bonds
• Shareholder and share purchase agreements
• Powers of attorney and affidavits

The amount depends on the state and the type of document; some are fixed, others a percentage of the value.

Why it matters

An agreement that should have been stamped but wasn't is still a contract, but under stamp law it generally can't be used as evidence until the duty and a penalty are paid. In a dispute, that is a delay you don't want.

What is e-stamping?

Instead of physical paper, you pay the duty online or at an authorised centre and get an e-stamp certificate with a unique number. In many states this is handled by the Stock Holding Corporation of India (SHCIL) at shcilestamp.com; some states run their own systems. The certificate can be verified online by anyone.

How to combine e-stamping with e-signing

1. Agree the final text of the contract.
2. Buy the e-stamp certificate for the right amount, in the name of the party paying the duty, with a short description of the agreement. Do this on or before the day the agreement is signed.
3. Put the e-stamp certificate as the first page(s) of the agreement.
4. Send the combined document for signature.
5. Keep the signed PDF, which now carries the e-stamp, the signatures and the audit trail together.

Common mistakes

• Buying the stamp after the contract is signed.
• Paying duty in the wrong state. Duty is usually payable where the document is signed, and sometimes again where it is used.
• Using the wrong article or value, which leads to deficit duty and a penalty later.

How April helps

When you send an Indian contract for signature on April, you can attach the e-stamp PDF so it appears in front of the signed agreement, with the signatures page and audit certificate at the end.

Stamp duty rules differ by state and change over time. This article is general information, not legal advice; check the rate for your document with your state's stamp office or a lawyer.