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Section 4 of the Indian Stamp Act, 1899 deals with **several instruments employed for completing a single transaction** of sale, mortgage or settlement. The default rule is:
A{'text': 'Every instrument involved in the transaction shall be separately chargeable with the duty prescribed for a conveyance, mortgage or settlement under any provision of any law in force in any State of India regardless of any other consideration', 'label': 'A'}
B{'text': 'Only the principal instrument shall be chargeable with the duty prescribed for the conveyance, mortgage or settlement; and each of the other instruments shall be chargeable with a duty of one rupee', 'label': 'B'}
C{'text': 'Only the last instrument executed in the transaction shall be chargeable, and all earlier instruments shall be exempt under any provision of any law in force in any State of India regardless of any other consideration of any kind', 'label': 'C'}
D{'text': 'No instrument involved in the transaction shall be chargeable with any duty whatsoever under any provision of any law in force in any State of India regardless of any other consideration of any kind under any law in force', 'label': 'D'}
Answer & Solution
Correct answer: B. {'text': 'Only the principal instrument shall be chargeable with the duty prescribed for the conveyance, mortgage or settlement; and each of the other instruments shall be chargeable with a duty of one rupee', 'label': 'B'}
1. Section 4 of the Act prescribes the rule for completing-a-transaction situations.
2. "**Only the principal instrument shall be chargeable with the duty prescribed** for the conveyance, mortgage or settlement; and each of the other instruments shall be chargeable with a duty of **one rupee** (instead of the duty prescribed for the other instruments)."
3. Effective 1 July 2021, an exception was added: in the case of issue, sale or transfer of securities, the instrument on which stamp duty is chargeable under Section 9A shall be the principal instrument, and no stamp duty shall be charged on any other related instruments.
_Source: ICSI CS Executive Paper 1 — Jurisprudence, Interpretation & General Laws, Lesson 14 (Indian Stamp Act, 1899), pp. 337-353._
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