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revenue stamp on voucher

Ashish M (Chartered Accountant) (2731 Points)

22 December 2009

while conducting audit of a construction company, i found all most many vouchers on which revenue stamps were not attached at all. The law says for teh same for every payment exceeding Rs.5000.

Pls tell whether it is the normal case with every normal organisation and whether it attaracts any penalty.

I READ THAT IF REVENUE STAMP NOT ATTACHED, THEN THE VOUCHER SHALL BE DEEEMED INVALID . THEN IS THAT MEANS SUPPOUSE A RAID IS CONDUCTED AND THOSE VOUCHERS ARE FOUND OUT, WHETHER THOSE SHALL BE CONSIDERED INVALID......

PLS CLEAR TO ME THE SAME....

THANX.

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24 Replies

CA Gaurav Jain (Charterted Accountant) (156 Points)
Replied 22 December 2009

dud,as there is no rule that the cash transaction above 5000/- will be disallowed or will not be trreated as expenditure..its a statutory requirement as per Stamp Act..

the voucher will not be treated as invalid voucher.

But Stamp Act says if a Company incurred expenditure above Rs. 5000/- comapny should contribute indirectly to the Govt. fund (by affixing the Stamp)...

Thanks & Regards

Gaurav Jain

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sivaram (Asst Mgr-Taxation) (6918 Points)
Replied 22 December 2009

Thanks Mr Gaurav for the explanation given

Sandeep Keswani (Tax Consultant) (1064 Points)
Replied 22 December 2009

Affixing Revenue Stamp on Expense voucher and allowance of the same under Income Tax Act are two seperate issues. The Assessing Officer CANNOT disallow the expenses merely because Revenue Stamp is not affixed on the vouchers, as there is no express provision to that effect. In other words, allowance of expense depends upon other factors such as its genuiness, purpose for which it is incurred, etc (we all know those criterias)

Affixing Revenue Stamp is, as Gaurav said covered by the Stamp Act. Even if the voucher is rendered invalid, the AO cannot disallow the same.

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(Guest)

The Rent receipt gets a legal sanctity when it fulfills the provision of law passed to regulate such transactions. As per Indian Stamp Act , certain receipts should have to be affixed with stamp.

Section 2(2 3) of the Indian Stamp Act 1899 makes it mandatory for affixing of stamp on any receipt as defined therein above Rs 5000 .[Previously it was Rs 500]

2(23) "Receipt" includes any note, memorandum or writing-
(a) whereby any money, or any bill of exchange, cheque or promissory note is acknowledged to have been received, or
(b) whereby any other movable property is acknowledged to have been received in satisfaction of a debt, or
(c) whereby any debt or demand, or any part of a debt or demand, is acknowledged to have been satisfied or discharged, or
(d) which signifies or imports any such acknowledgment;
and whether the same is or is not signed with the name of any person "

Therefore, affixing stamp does not depend on month or year , but every time a receipt is given. If every month receipt above Rs 5000 is given, stamp has to be affixed there. If only one receipt at the end of year is given , one stamp is required. The basic requirement under the law is RECEIPT.

Ashish M (Chartered Accountant) (2731 Points)
Replied 22 December 2009

Originally posted by : Rajesh
	The Rent receipt gets a legal sanctity when it fulfills the provision of law passed to regulate such transactions. As per Indian Stamp Act , certain receipts should have to be affixed with stamp. Section 2(2 3) of the Indian Stamp Act 1899 makes it mandatory for affixing of stamp on any receipt as defined therein above Rs 5000 .[Previously it was Rs 500] 2(23) "Receipt" includes any note, memorandum or writing- (a) whereby any money, or any bill of exchange, cheque or promissory note is acknowledged to have been received, or (b) whereby any other movable property is acknowledged to have been received in satisfaction of a debt, or (c) whereby any debt or demand, or any part of a debt or demand, is acknowledged to have been satisfied or discharged, or (d) which signifies or imports any such acknowledgment; and whether the same is or is not signed with the name of any person " Therefore, affixing stamp does not depend on month or year , but every time a receipt is given. If every month receipt above Rs 5000 is given, stamp has to be affixed there. If only one receipt at the end of year is given , one stamp is required. The basic requirement under the law is RECEIPT.

suppourting what is said above, i want to clarify that i m not asking whether it will be allowed or disallowed.

what my queston is whether the transaction is valid or not........

WHAT IS WANT TO SAY IS THAT SINCE STAMP ACT SAYS SOMETHING, IT MUST BE MANDATORY. MY QUESTION IS WHAT PENALTY OR OTHERWISE WOULD IT ATTRACT IF IT IS NOT FOLLOWED. A PROVISIN IS OF NO USE IF IT DOESN'T CONTAIN ANY PENALTY PROVISION. WHAT IS THE PENALTY PROVISION RLATING TO TIHS........!???????????????????????????????????

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shailesh agarwal (professional accountant) (7642 Points)
Replied 22 December 2009

NO PANALTY MY DEAR

DURING AUDIT YOU JUST MARK A GENERAL OBJECTION THAT VOUCERS ARE NOT STAMPED AS PER INDIAN STAMPED ACT-ONLY

WE ALL KNOW THIS IS NOT FAIR

BUT WHO CARES

manjari (Article ) (56 Points)
Replied 26 December 2009

i agree with u all regarding wat u have mentioned in ur replies..., but i wanted to ask that wat could be the consequences if v don affix the revenue stamp along with voucher of 5000 or more, as per indian stamp act???

(Guest)

CHAPTER VII

CRIMINAL OFFENCES AND PROCEDURE

62. Penalty for executing etc., instrument not duly stamped - (1) Any person-

(a) drawing, making, issuing, endorsing or transferring, or signing otherwise than as a witness, or presenting for acceptance or payment, or accepting, paying or receiving payment of, or in any manner negotiating, any bill of exchange ¹[payable otherwise than on demand] ²* * * or promissory note without the same being duly stamped, or

(b) executing or signing otherwise than as a witness any other instrument chargeable with duty without the same being duly stamped; or voting or attempting to vote under any proxy not duly stamped ;

¹Inserted by Act 5 of 1927, section 5 (7).

²The word “cheque” omitted by ibid.

shall for every such offence be punishable with fine which may extend to five hundred rupees :

Provided that, when any penalty has been paid in respect of any instrument under section 35, section 40 or section 61, the amount of such penalty shall be allowed in reduction of the fine (if any) subsequently imposed under this section in respect of the same instrument upon the person who paid such penalty.

(2) If a share-warrant is issued without being duly stamped the company issuing the same, and also every person who, at the time when it is issued, is the managing director or secretary or other principal officer of the company shall be punishable with fine which may extend to five hundred rupees.

63. Penalty for failure to cancel adhesive stamp - Any person required by section 12 to cancel an adhesive stamp and failing to cancel such stamp in manner prescribed by that section, shall be punishable with fine which may extend to one hundred rupees.

64. Penalty for omission to comply with provisions of section 27 - Any person who, with intent to defraud the Government,-

executes any instrument in which all the facts and circumstances required by section 27 to be set forth in such instrument are not fully and truly set forth ; or

being employed or concerned in or about the preparation of any instrument, neglects or omits fully and truly to set forth therein all such facts and circumstances ; or

does any other act calculated to deprive the Government of any duty or penalty under this Act;

shall be punishable with fine which may extend to five thousand rupees.

65. Penalty for refusal to give receipt and for devices to evade duty on receipts - Any person who-

being required under section 30 to give a receipt, refuses or neglects to give the same; or

with intent to defraud the Government of any duty, upon a payment of money or delivery of property exceeding twenty rupees in amount or value, gives a receipt for an amount or value not exceeding twenty rupees, or separates or divides the money or property paid or delivered ;

shall be punishable with fine which may extend to one hundred rupees.

66. Penalty for not making out policy or making one not duly stamped - Any person who-

receives, or takes credit for, any premium or consideration for any contract of insurance and does not, within one month after receiving, or taking credit for, such premium or consideration make out and execute a duly stamped policy of such insurance; or

makes, executes or delivers out any policy which is not duly stamped or pays or allows in account, or agrees to pay or allow in account any money upon, or in respect of, any such policy;

shall be punishable with fine which may extend to two hundred rupees.

67. enalty for not drawing full number of bills or marine policies purporting to be in sets -Any person drawing or executing a bill of exchange ¹[payable otherwise than on demand] or a policy of marine insurance purporting to be drawn or executed in a set of two or more, and not at the same time drawing or executing on paper duly stamped the whole number of bills or policies of which such bill or policy purports the set to consist, shall be punishable with fine which may extend to one thousand rupees.

¹Inserted by Act 5 of 1927, section 5 (8).

68. Penalty for postdating bills, and for other devices to defraud the revenue - Any person who-

with intent to defraud the Government of duty, draws, makes or issues any bill of exchange or promissory note bearing a date subsequent to that on which such bill or note is actually drawn or made ; or

knowing that such bill or note has been so post-dated, endorses, transfers, presents for acceptance or payment, or accepts; pays or receives payment of, such bill or note, or in any manner negotiates the same ; or

with the like intent practices or is concerned in any act, contrivance or device not specially provided for by this Act or any other law for the time being in force ;

shall be punishable with fine which may extend to one thousand rupees.

69. Penalty for breach of rule relating to sale of stamps and for unauthorized sale- (a) Any person appointed to sell stamps who disobeys any rule made under section 74, and

(b) any person not so appointed who sells or offers for sale any stamp (other than¹[ten naye paise or five naye paise] adhesive stamp) ;

(c) shall be punishable with imprisonment for a term which may extend to six months, or with fine which may extend to five hundred rupees, or with both.

70. Institution and conduct of prosecutions - (1) No prosecution in respect of any offence punishable under this Act or any Act hereby repealed shall be instituted without the sanction of the Collector or such other officer as the ²[State Government] generally, or the Collector specially, authorizes in that behalf.

(2) The Chief Controlling Revenue-authority, or any officer generally or specially authorized by it in this behalf, may stay any such prosecution or compound any such offence.

(3) The amount of any such composition shall be recoverable in the manner provided by section 48.

¹Substituted by the Indian Stamp (Amendment) Act, 1958 (19 of 1958, section 10.

²Substituted for the words “Collecting Government” by the Adaptation of Laws Order, 1950, First Schedule.

71. Jurisdiction of Magistrates - No Magistrate other than a Presidency Magistrate or a Magistrate, whose powers are not less than those of a Magistrate of the second class, shall try any offence under this Act.

72. Place of trial - Every such offence committed in respect of any instrument may be tried in any district or presidency-town in which such instrument is found, as well as in any district or presidency-town in which such offence might be tried under the Code of Criminal Procedure for the time being in force.