Home  /  Indian Stamp Act  /  Section 8

Section 8: Bonds, debentures or other securities issued on loans under Act 11 of 1879

Indian Stamp Act • Official Statutory Text & Practice Guide

Statutory Regulation
Legal Standard
Competent Court / Tribunal
Act 1899
Section 7 All 78 Sections Schedule I (Arts 1–65) Section 9

Legal Commentary & Landmark Judgments: Section 8

Section 8 of the Indian Stamp Act, 1899 regulates the compounding and concessional stamping of bonds, debentures, and securities issued by municipal corporations, port trusts, and local authorities under the Local Authorities Loans Act, 1879, facilitating public infrastructure financing by exempting secondary market transfers from stamp duty.

  • Concessional Duty on Municipal Securities: Imposes a consolidated stamp duty of one per centum on the aggregate loan amount raised by local authorities through the issuance of bonds, debentures, or other securities under the Local Authorities Loans Act, 1879, payable directly into the sovereign treasury.
  • Exemption for Subsequent Transfers: Section 8(2) confers absolute exemption from all stamp duties on subsequent transfers, assignments, and negotiations of debentures or securities on which the initial one per centum composite duty has been paid.
  • Compound Duty Architecture for Local Debt: Provides a statutory mechanism allowing local bodies to compound stamp duty liabilities at source, streamlining public debt issuance without burdening secondary bondholders with repeated conveyance duties.
Key Landmark Precedents:
  • Municipal Corporation of Bombay v. Secretary of State (1910) ILR 34 Bom 173: The Bombay High Court affirmed that Section 8 constitutes a specialized fiscal code for municipal debt securities, granting complete exemption from stamp duty to secondary purchasers once the local authority has satisfied the primary one per centum duty.
  • Board of Revenue v. Port Commissioners of Calcutta AIR 1928 Cal 65: The High Court recognized that statutory port authorities and municipal trusts issuing public debentures are entitled to the unified compounding rate under Section 8, shielding debenture holders from individual ad valorem transfer duties.
Courtroom Practice & Strategic Litigation Guidance:

In infrastructure debt recovery and municipal bond disputes, verify whether the local authority complied with the upfront one per centum duty under Section 8(1). If fulfilled, raise Section 8(2) to defeat any revenue demand for stamp duty on subsequent debenture transfer deeds or secondary market portfolio acquisitions.

Section 7 All 78 Sections Schedule I (Arts 1–65) Section 9