Shailendra Mishra (Legal Consultant) 22 December 2011

Stamp duty rate for the service agreement

Dear Friends:

Could any one please help me on the Stamp Duty need to taken into consideration for the Service Agreement (i.e What amonut of Stamp used for the Service Agreement) where no clear terms of payment provided?

Is it (Stamp Duty) same for all the states or it vary from state to state?

Thank You :)

Best Regards,

Shailendra

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3 Replies

sandeep gangwar (AUDITOR) 22 December 2011

In line with the provisions under section 80(2), Stamp Duty Act 1949, the YB Minister of Finance has decided that the stamp duty policy on service agreements (including construction contracts) will be as follows:-

i. All service agreements signed with effect from 1st January 2011 will be imposed stamp duty at 0.1% ad-valorem on the service contract value;

ii. If the service involves multi-tier, the said service agreement will be imposed stamp duty at 0.1% ad-valorem at one level only. The stamp duty at 0.1% ad-valorem will be imposed either at:

a. First tier for service agreements signed between a private entity with the service provider.

b. Second tier for service agreements signed between an entity which have been exempted from paying the stamp duty (e.g. The Government of Malaysia) with the service provider.

Service agreements signed at other levels will be imposed a flat rate RM50.00 stamp duty.

In summary the above means as follows:-

1. Private Contracts

First tier (Client & Main Contractor) – ad-valorem stamp duty (0.1% of contract value).

Second tier onwards– stamp duty at RM50.00 flat rate.

2. Government Contracts

First tier (Government & Main Contractor) – exempted from paying stamp duty.

Second tier (Main Contractor & Sub Contractor) – ad-valorem stamp duty (0.1% of contract value).

Third tier onwards – stamp duty at RM50.00 flat rate.

iii. In the event the service agreement is cancelled by the party which offers the contract and the stamp duty has been paid up for all the related service agreements, only the stamp duty of 0.1% ad-valorem will be returned. Whilst the RM50.00 flat rate stamp duty paid on the other service agreements will not be returned

Shailendra Mishra (Legal Consultant) 23 December 2011

Hi sandeep, Thanks for the input.

However the information (that you have provided) does not seems accurate due to many factors:

Indian Stamp Act year is 1899 and not the 1949; AND in india we do not have the YB Minister of Finance; AND our currency is INR and not the RM (Ringgit Malaysia i.e. RM).

You have provided the stamp duty information for the state of Malaysia and NOT for India and Indian State(s). I am requesting you to not to provide misleading information because people rely on this information and lead to lose their trust and credibility and sometime financial loss.

Have a great day ahead:)

Regards,

Shailendra