[MadinMumbai]

This is a bit off topic but there seem to be a lot of knowledgeable people on this group, and possibly, they can help deconstruct some of these questions.

1. What is the purpose of a revenue stamp? Recently my insurance payout was stalled for want of a revenue stamp on the document. It got me wondering- how much revenue does the government collect from revenue stamps? And how much does it spend on printing and distributing them? Surely it is not enough to be a revenue stream for the government. Then what is the purpose of this little irritant that stumps most meticulous amongst us? My signatures were on the document and they don't become any more valuable with a revenue stamp under them.

2. Affidavits/agreements on stamp paper. My agreement with the bank for a locker has to be updated. But it cannot simply be a signature of two parties on a piece of paper. It has to be on a Rs.100 stamp paper. Why? Other than a colonial hangover why is this even necessary? How does a stamp paper make a simple civil contract any more binding? Rs. 10 stamp paper for an affidavit does nothing by way of enhancing the assertion contained in the document.

3. Half of Mumbai's population, place where I live, stays across town from their place of work. So, people from Malad travel to Powai and people from Powai travel to Malad. In a sensible situation a person might want to stay close to their place of work. But as we know people shift jobs more often than they shift homes. Most people wouldn't ever consider moving even if it saves them a couple of hours in commuting every day. Why? If property prices were similar wouldn't one be tempted to sell and buy a house close to wherever they find a job opportunity? In Mumbai even if the property prices were similar in two geographies there is a hefty price to any relocation plans in the form on registration & stamp duty. So, even if you can afford a move you don't consider it because of the 10-12% you'd fork out to the government.

There are umpteen such colonial practices which we seamlessly adhere to. Nobody in government seems to question the impact on ease of doing business of most of these little speed bumps.

[WindmillsFly]

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[vrprabhu]

Simple answer -
1. The stamps & stamp papers + duty are a source of revenue to the Government.
2. Only if a document is validly 'stamped' (i.e. applicable stamp duty paid) the contract between the two parties cannot be legally enforced through a court of law, in case of dispute amongst them

[MadinMumbai]

Originally Posted by vrprabhu

2. Only if a document is validly 'stamped' (i.e. applicable stamp duty paid) the contract between the two parties cannot be legally enforced through a court of law, in case of dispute amongst them

From my understanding, which is limited I will admit, this means that any contract is invalid unless the government has extorted money on it. Because, other than collecting money, the government adds no value to the enforcement of the contract. It smells like a colonial restriction that's meant to thwart any business activity. Ease of Doing Business, anyone?