An NCLT order sanctioning a scheme of amalgamation or demerger is not merely a judicial approval. It is, for stamp duty purposes, an instrument of conveyance. The Indian Stamp Act, 1899 does not contain a specific entry for "NCLT scheme order." The order is therefore brought within the ambit of "conveyance" under Section 2(10), and it is chargeable at the rate prescribed by the Schedule of the relevant State Stamp Act. The classification has profound consequences: the stamp duty is not a nominal filing fee, but a percentage of the value of the property or the consideration transferred, and the rates vary dramatically across jurisdictions.
The Conveyance Classification and Its Consequences
Section 2(10) of the Indian Stamp Act defines "conveyance" to include a conveyance on sale and every instrument by which property, whether movable or immovable, is transferred inter vivos. An NCLT sanction order transfers the undertaking, assets, and liabilities of the transferor company to the transferee company by operation of the order. The order is therefore an instrument of transfer, and it is chargeable as a conveyance.
The stamp duty is payable on the instrument, not on the transaction. Where the scheme is sanctioned by a single NCLT order, the duty is computed on the value of the property or the consideration stated in the scheme, as the State law prescribes. Where the scheme involves companies registered in different States, the position becomes more complex.
The Divergence Across States
The rates and the bases of computation vary significantly. In Haryana, the stamp duty payable on a merger order is 1.5 per cent of the market value of the property or the consideration amount set forth in the scheme, subject to a maximum of ₹7 crore. In Maharashtra, the duty on an amalgamation is up to 5 per cent of the market value, and for certain arrangements the rate can be as high as 10 per cent of the aggregate market value of the shares issued or allotted and the consideration paid. Delhi offers a comparatively favourable regime for parent-subsidiary arrangements: 1.5 per cent on immovable property, capped at ₹7.5 crore, and nil on share issuance.
Gujarat applies 3 per cent on unlisted shares; Karnataka charges 2 per cent; Tamil Nadu imposes 2 per cent on unlisted shares; and Maharashtra charges 0.25 per cent on listed shares and 3 per cent on unlisted shares. The recent central initiative to cap the stamp duty on corporate restructuring at 5 per cent of the market value is a significant reform, but it does not eliminate the state-level divergence, and companies must still compute the duty under the applicable State law.
The Two-Order Problem
The most technically demanding issue arises where the transferor and transferee companies have their registered offices in different States. Each company must file a separate application before the NCLT bench having jurisdiction over its registered office, unless a specific exemption for a joint petition has been obtained. The result is two NCLT orders sanctioning the same scheme.
The question that follows is whether both orders are liable to be stamped, or whether paying stamp duty on one order—typically in the State with the higher duty or the State where the assets are situated—is sufficient. The answer depends on the situs of the property and the language of the State Stamp Act. A company that assumes that a single stamping will suffice may find that the second State insists on its own duty, and the scheme's implementation is delayed while the adjudication is resolved.
The Planning Imperative
A technically sound scheme anticipates the stamp duty before the first motion is filed. The scheme should identify the properties that are being transferred, the State or States in which they are situated, and the basis on which the duty will be computed. Where the transaction permits, the structure should be designed to minimise the duty without crossing into artificial avoidance. The adjudication by the Superintendent of Stamps is not a formality; it is the step at which the duty is finally determined, and a defective adjudication can hold up the effective date of the scheme.
Call to Action
Anuj Desai & Associates advises companies on the stamp duty implications of NCLT schemes—from the state-wise rate analysis and the two-order problem to the adjudication process and the integration of stamp duty into the scheme timeline. If your scheme involves assets in multiple States or a high-value transfer, we can help you plan the stamping strategy before the first motion is filed.
📧 office@anujdesaiassociates.com
📞 9619456656
🌐 https://anujdesaiassociates.com
🔗 linkedin.com/in/ca-anuj-desai-122547230
Article 182