Learn the stamp duty on increase in authorised share capital in India. Check state-wise rates, SH-7 filing, calculation, maximum duty, documents and FAQs.
Introduction
When a company decides to expand its business, attract new investment, or issue additional shares beyond its existing limit, it must first increase its authorised share capital in accordance with the Companies Act, 2013. However, increasing the authorised share capital is not merely a corporate compliance requirement. In most cases, it also attracts stamp duty on increase in authorised share capital, which must be paid before or at the time of filing the prescribed forms with the Registrar of Companies (ROC).
The amount of stamp duty on increase in authorised share capital is not uniform across India. Although the corporate procedure for increasing authorised share capital is governed by the Companies Act, 2013, the stamp duty payable is determined by the applicable stamp duty law of the State or Union Territory where the company’s registered office is situated. As a result, companies registered in different States may be required to pay different rates of stamp duty for the same increase in authorised share capital.
Understanding the applicable stamp duty before initiating the ROC filing process is essential for ensuring timely compliance and avoiding delays in the approval of Form SH-7. Companies often face confusion regarding the applicable rate, the method of calculation, the maximum amount of stamp duty payable, and whether the duty is levied on the total authorised share capital or only on the amount of increase. These issues become even more significant for startups, growing businesses, and companies planning multiple rounds of capital expansion.
This comprehensive guide explains the legal framework governing stamp duty on increase in authorised share capital in India. It discusses when stamp duty becomes payable, the statutory provisions under the Companies Act, 2013 and the applicable stamp duty laws, the method of calculating the duty with practical examples, the procedure for filing Form SH-7, the documents required, and other important compliance considerations. It also provides a detailed State-wise and Union Territory-wise guide to the stamp duty rates applicable across India, enabling companies to identify the correct stamp duty based on the location of their registered office.
What is Authorised Share Capital?
Authorised share capital (also known as authorised capital or nominal capital) is the maximum amount of share capital that a company is legally authorised to issue to its shareholders, as specified in the capital clause of its Memorandum of Association (MoA). This limit is determined at the time of incorporation and can be increased subsequently by following the procedure prescribed under the Companies Act, 2013.
Authorised share capital does not represent the amount of money actually invested in the company. Instead, it specifies the upper limit of share capital that the company may issue without first obtaining the approval of its shareholders and altering its capital clause. For example, if a company has an authorised share capital of ₹10 lakh divided into 1,00,000 equity shares of ₹10 each, it cannot issue shares exceeding ₹10 lakh unless it first increases its authorised share capital in accordance with law.
Companies generally increase their authorised share capital when they require additional funds for business expansion, induct new investors, issue bonus shares, comply with investment agreements, or raise capital through further issue of shares. Since the existing authorised capital acts as a statutory ceiling, increasing this limit is often the first step before issuing additional shares.
The procedure for increasing authorised share capital is primarily governed by Section 61 of the Companies Act, 2013, read with the company’s Articles of Association. After obtaining the necessary approvals from the Board of Directors and shareholders, the company is required to file Form SH-7 with the Registrar of Companies within the prescribed time. In addition to the prescribed filing fee, the company is also required to pay the applicable stamp duty on increase in authorised share capital, wherever such duty is leviable under the stamp duty law applicable to the State or Union Territory in which its registered office is situated.
It is important to distinguish authorised share capital from issued share capital, subscribed share capital, and paid-up share capital. While authorised share capital represents the maximum limit that the company is permitted to issue, issued share capital refers to the shares actually offered by the company, subscribed share capital refers to the shares accepted by investors, and paid-up share capital represents the amount actually paid by the shareholders. Therefore, merely increasing the authorised share capital does not automatically result in the issue of additional shares; it only enhances the company’s legal capacity to issue them in the future.
When is Stamp Duty Payable on Increase in Authorised Share Capital?
Stamp duty on increase in authorised share capital becomes payable when a company legally increases the maximum amount of share capital that it is authorised to issue by altering the capital clause of its Memorandum of Association (MoA). This liability generally arises after the shareholders approve the increase in accordance with the Companies Act, 2013 and before or at the time of filing Form SH-7 with the Registrar of Companies (ROC). The stamp duty is collected electronically through the MCA filing system in accordance with the stamp duty law applicable to the State or Union Territory where the company’s registered office is situated.
Merely passing a Board Resolution or convening a general meeting does not, by itself, attract stamp duty. The duty becomes payable because the company alters its constitutional document—the Memorandum of Association—to reflect the enhanced authorised share capital. Since the Memorandum of Association is an instrument chargeable with stamp duty under the applicable stamp duty laws, any increase in the authorised share capital that requires alteration of the Memorandum gives rise to a corresponding stamp duty liability.
The amount of stamp duty is not uniform throughout India. Although the procedure for increasing authorised share capital is governed by the Companies Act, 2013, the rate of stamp duty is prescribed by the respective State or Union Territory. Consequently, two companies increasing their authorised share capital by the same amount may pay different stamp duty if their registered offices are situated in different States. The MCA portal automatically determines the applicable stamp duty based on the registered office of the company and collects the amount during the filing of Form SH-7.
It is also important to note that stamp duty is generally payable only on the amount by which the authorised share capital is increased, and not on the company’s total authorised share capital after the increase. For example, if a company’s authorised share capital is increased from ₹10 lakh to ₹25 lakh, the applicable stamp duty is ordinarily calculated on the incremental increase of ₹15 lakh, subject to the stamp duty provisions applicable in the relevant State or Union Territory.
Companies should ensure that the applicable stamp duty is correctly determined and paid before completing the ROC filing process. Payment of incorrect or deficient stamp duty may result in delays in processing Form SH-7 and may require additional compliance under the applicable stamp duty law.
Legal Framework Governing Stamp Duty on Increase in Authorised Share Capital
The legal framework governing stamp duty on increase in authorised share capital in India is derived from a combination of the Companies Act, 2013, the Indian Stamp Act, 1899, and the respective State or Union Territory stamp laws. While the Companies Act prescribes the corporate procedure for increasing the authorised share capital, the liability to pay stamp duty arises under the applicable stamp duty legislation. Consequently, every company proposing to increase its authorised share capital must comply with both corporate law requirements and the stamp duty law applicable to the State or Union Territory in which its registered office is situated.
Companies Act, 2013
The procedure for increasing authorised share capital is primarily governed by the Companies Act, 2013. Section 61 empowers a company limited by shares to alter its share capital, including increasing its authorised share capital, if such increase is authorised by its Articles of Association. After obtaining the necessary approvals from the Board of Directors and shareholders, the company is required to file Form SH-7 with the Registrar of Companies within the prescribed period, giving notice of the alteration in its share capital. The filing of Form SH-7 is a mandatory statutory compliance irrespective of the State in which the company is registered.
Indian Stamp Act, 1899
The Indian Stamp Act, 1899 lays down the general legal framework relating to stamp duties in India and specifies that instruments mentioned in the applicable stamp schedule are chargeable with stamp duty. However, in relation to corporate instruments such as the alteration of authorised share capital, the actual rate of stamp duty is governed by the law applicable in the respective State or Union Territory. Thus, the Indian Stamp Act provides the legislative foundation for levy of stamp duty, while the applicable rates are determined by the relevant State legislation or notifications.
State and Union Territory Stamp Laws
Unlike the corporate procedure, stamp duty on increase in authorised share capital is not uniform throughout India. Every State and Union Territory prescribes its own rate, method of calculation, minimum or maximum limits, and other conditions for levy of stamp duty on an increase in authorised share capital. As a result, two companies increasing their authorised share capital by the same amount may be liable to pay different amounts of stamp duty if their registered offices are situated in different jurisdictions. The applicable rate is determined on the basis of the location of the company’s registered office on the date of filing Form SH-7.
Electronic Collection Through the MCA Portal
To simplify compliance, stamp duty payable on Form SH-7 is collected electronically through the Ministry of Corporate Affairs (MCA) filing portal. The MCA system automatically identifies the State or Union Territory in which the company’s registered office is located and calculates the applicable stamp duty in accordance with the notified rates for that jurisdiction. This integrated mechanism enables companies to pay the applicable filing fees and stamp duty simultaneously while submitting Form SH-7 to the Registrar of Companies.
Accordingly, any company proposing to increase its authorised share capital should not assume that a single stamp duty rate applies across India. Before filing Form SH-7, it is essential to determine the stamp duty applicable in the State or Union Territory where the company’s registered office is situated. The State-wise stamp duty rates on increase in authorised share capital are discussed in detail later in this guide.
Why Do Stamp Duty Rates Differ Across States?
One of the most common questions asked by companies is why stamp duty on increase in authorised share capital is not the same throughout India. The answer lies in India’s constitutional framework governing the levy and collection of stamp duties.
Although the Indian Stamp Act, 1899 provides the general legal framework relating to stamp duties, the power to prescribe the rates of stamp duty on many instruments, including those relating to companies, is exercised by the respective States and Union Territories in accordance with the constitutional distribution of legislative powers. Consequently, each State or Union Territory may prescribe its own rate of stamp duty, minimum or maximum limits, exemptions, and method of calculation. This is the primary reason why the stamp duty payable on the same increase in authorised share capital may vary from one jurisdiction to another.
For example, if two companies each increase their authorised share capital by ₹1 crore, but one company has its registered office in Delhi and the other in Maharashtra, the stamp duty payable may differ because the applicable rate is determined by the stamp duty law of the State where the company’s registered office is situated. Therefore, the location of the registered office plays a crucial role in determining the applicable stamp duty.
The corporate procedure for increasing authorised share capital, however, remains uniform across India. Every company must comply with the provisions of the Companies Act, 2013 by obtaining the necessary approvals and filing Form SH-7 with the Registrar of Companies. What changes from one State or Union Territory to another is only the amount of stamp duty payable during the filing process.
To facilitate compliance, the Ministry of Corporate Affairs (MCA) has integrated the payment of stamp duty with the electronic filing of Form SH-7. The MCA portal automatically identifies the State or Union Territory in which the company’s registered office is located and applies the corresponding stamp duty rate notified for that jurisdiction. Accordingly, companies are not required to manually select the applicable rate, but they should still verify that the stamp duty computed by the system is consistent with the law applicable to their State or Union Territory.
Since stamp duty rates are State-specific, companies should always determine the applicable rate based on the location of their registered office before initiating the process of increasing their authorised share capital. To assist businesses, professionals, and startups, this guide provides a comprehensive State-wise and Union Territory-wise explanation of the stamp duty payable on increase in authorised share capital across India.
How is Stamp Duty Calculated on Increase in Authorised Share Capital?
The method of calculating stamp duty on increase in authorised share capital depends on the stamp duty law applicable to the State or Union Territory where the company’s registered office is situated. While the corporate procedure for increasing authorised share capital is uniform throughout India, the rate of stamp duty, the maximum amount payable, and the method of computation may vary from one State or Union Territory to another.
As a general rule, stamp duty is calculated on the amount by which the authorised share capital is increased, and not on the company’s total authorised share capital after the increase. In other words, the liability is based on the incremental increase in the authorised share capital.
Formula for Calculating Stamp Duty
The amount of stamp duty is generally calculated using the following formula:
Stamp Duty = Increase in Authorised Share Capital × Applicable State Stamp Duty Rate
Since every State and Union Territory prescribes its own rate of stamp duty, companies should first determine the applicable rate for the jurisdiction in which their registered office is located before calculating the duty payable.
Example 1
A company has an authorised share capital of ₹10,00,000 and proposes to increase it to ₹25,00,000.
- Existing authorised share capital: ₹10,00,000
- Revised authorised share capital: ₹25,00,000
- Increase in authorised share capital: ₹15,00,000
In this case, stamp duty is calculated only on the increase of ₹15,00,000 and not on the revised authorised share capital of ₹25,00,000.
Example 2
A company increases its authorised share capital from ₹1 crore to ₹3 crore.
- Existing authorised share capital: ₹1,00,00,000
- Revised authorised share capital: ₹3,00,00,000
- Increase in authorised share capital: ₹2,00,00,000
Here again, the applicable stamp duty is calculated only on the incremental increase of ₹2 crore, subject to the rate and maximum limit prescribed by the relevant State or Union Territory.
Maximum Stamp Duty
Many States and Union Territories prescribe a maximum cap on the amount of stamp duty payable for an increase in authorised share capital. Once the calculated stamp duty reaches the prescribed maximum limit, no additional stamp duty is payable even if the increase in authorised share capital is substantially higher. Since the maximum limit differs across jurisdictions, companies should verify the applicable provisions before filing Form SH-7.
Important Points to Remember
- Stamp duty is generally calculated on the amount of increase in authorised share capital and not on the company’s total authorised share capital.
- The applicable stamp duty rate varies from one State or Union Territory to another.
- Some States prescribe a maximum ceiling on the amount of stamp duty payable.
- The applicable stamp duty is determined based on the location of the company’s registered office.
- The stamp duty is collected electronically through the MCA portal while filing Form SH-7 with the Registrar of Companies.
The next section of this guide provides a State-wise and Union Territory-wise explanation of the applicable stamp duty rates, enabling companies to determine the correct amount payable based on the jurisdiction in which their registered office is situated.
Practical Examples of Calculating Stamp Duty on Increase in Authorised Share Capital
The following examples illustrate the general principle for calculating stamp duty on increase in authorised share capital. Since the applicable rate of stamp duty differs from one State or Union Territory to another, these examples focus on identifying the amount on which stamp duty is payable rather than the actual amount of stamp duty.
Example 1: Increase from ₹10 Lakh to ₹25 Lakh
ABC Private Limited has an authorised share capital of ₹10,00,000. The company proposes to increase its authorised share capital to ₹25,00,000 to raise additional funds from investors.
| Particulars | Amount |
|---|---|
| Existing Authorised Share Capital | ₹10,00,000 |
| Revised Authorised Share Capital | ₹25,00,000 |
| Increase in Authorised Share Capital | ₹15,00,000 |
In this example, stamp duty is payable only on the increase of ₹15,00,000. The applicable rate will depend upon the State or Union Territory in which the company’s registered office is situated.
Example 2: Increase from ₹1 Crore to ₹3 Crore
XYZ Technologies Private Limited intends to expand its operations and decides to increase its authorised share capital.
| Particulars | Amount |
|---|---|
| Existing Authorised Share Capital | ₹1,00,00,000 |
| Revised Authorised Share Capital | ₹3,00,00,000 |
| Increase in Authorised Share Capital | ₹2,00,00,000 |
Here, stamp duty is calculated only on the incremental increase of ₹2 crore and not on the revised authorised share capital of ₹3 crore.
Example 3: No Increase in Authorised Share Capital
PQR Industries Limited already has an authorised share capital of ₹5 crore. The company proposes to issue additional shares within this existing authorised capital without increasing the authorised share capital.
In this situation, no stamp duty on increase in authorised share capital is payable, as there is no alteration to the authorised share capital. However, the issue of shares may attract other statutory compliances under the Companies Act, 2013, depending upon the nature of the transaction.
Example 4: Multiple Increases Over Different Years
Suppose a company has the following history of increases in authorised share capital:
| Financial Year | Authorised Share Capital Before Increase | Authorised Share Capital After Increase | Increase |
|---|---|---|---|
| 2023-24 | ₹10,00,000 | ₹25,00,000 | ₹15,00,000 |
| 2025-26 | ₹25,00,000 | ₹50,00,000 | ₹25,00,000 |
| 2027-28 | ₹50,00,000 | ₹1,00,00,000 | ₹50,00,000 |
Stamp duty is payable separately on each increase at the time the authorised share capital is enhanced. The duty is not recalculated on the total authorised share capital every time an increase takes place.
Key Takeaways
The above examples demonstrate three important principles:
- Stamp duty is generally payable only on the amount by which the authorised share capital is increased.
- The company’s existing authorised share capital does not ordinarily form part of the calculation.
- The actual amount of stamp duty payable depends upon the stamp duty rate applicable in the State or Union Territory where the company’s registered office is located.
The next section provides a State-wise and Union Territory-wise guide to the applicable stamp duty rates on increase in authorised share capital across India.
Maximum Stamp Duty on Increase in Authorised Share Capital
A common question raised by companies is whether there is any upper limit on the amount of stamp duty on increase in authorised share capital. The answer depends entirely on the stamp duty law applicable to the State or Union Territory in which the company’s registered office is situated.
Many States and Union Territories prescribe a maximum ceiling (cap) on the stamp duty payable when a company increases its authorised share capital. Once the stamp duty calculated in accordance with the applicable rate reaches the prescribed maximum limit, no further stamp duty is payable, irrespective of the amount by which the authorised share capital is increased. However, not every State follows the same approach. Some States prescribe a monetary ceiling, while others levy stamp duty according to a different statutory formula or scale. Therefore, companies should always verify the law applicable to the State or Union Territory in which they are registered before calculating the duty payable.Registrar of Companies
The existence of a maximum cap is particularly significant for companies proposing substantial increases in authorised share capital, such as startups raising venture capital, infrastructure companies, listed companies, and businesses undertaking large-scale expansion. Where the applicable State law prescribes a maximum limit, the stamp duty liability does not continue to increase indefinitely once that ceiling has been reached. Conversely, where no such ceiling exists or a different method of computation is prescribed, the company must calculate and pay stamp duty strictly in accordance with the applicable statutory provisions.
It is also important to understand that the maximum stamp duty, wherever prescribed, is governed entirely by the law of the concerned State or Union Territory. Companies should not assume that the maximum limit applicable in one State is available in another. The amount payable may vary considerably because each jurisdiction prescribes its own rate of stamp duty, method of computation, exemptions, and monetary limits.
In the State-wise Stamp Duty Rates section later in this guide, we have separately explained the applicable rate, the maximum stamp duty (where prescribed), and other important provisions for each State and Union Territory. This will enable companies to identify the correct stamp duty payable based on the location of their registered office before filing Form SH-7 with the Registrar of Companies.
ROC Filing (Form SH-7)
Once a company has validly increased its authorised share capital in accordance with the Companies Act, 2013, it is required to notify the Registrar of Companies (ROC) by filing Form SH-7 (Notice to Registrar of any alteration of share capital). The filing of Form SH-7 is a mandatory statutory compliance prescribed under Section 64(1) of the Companies Act, 2013, read with Rule 15 of the Companies (Share Capital and Debentures) Rules, 2014. The form is required to be filed with the Registrar of Companies within 30 days of the alteration of the authorised share capital.
Form SH-7 serves as the official notice to the Registrar that the company has altered its share capital. In cases involving an increase in authorised share capital, the form captures details such as the existing and revised authorised share capital, the amount of the increase, the resolution approving the alteration, and the revised capital structure. Where applicable, the company is also required to provide the Service Request Number (SRN) of Form MGT-14, if the relevant resolution has been filed separately.
The filing of Form SH-7 also facilitates the electronic payment of the applicable ROC filing fees and stamp duty on increase in authorised share capital. The MCA portal automatically identifies the State or Union Territory in which the company’s registered office is situated and computes the applicable stamp duty in accordance with the notified stamp duty rates for that jurisdiction. Accordingly, companies are not required to make a separate offline payment of stamp duty for this purpose.
Before filing Form SH-7, the company should ensure that:
- the increase in authorised share capital is permitted by its Articles of Association;
- the necessary Board and shareholders’ approvals have been obtained;
- the capital clause of the Memorandum of Association has been duly altered, wherever required;
- all supporting documents are complete and digitally signed; and
- the applicable ROC filing fees and stamp duty have been correctly determined.
Failure to file Form SH-7 within the prescribed time may result in additional filing fees and other consequences under the Companies Act, 2013. Companies should therefore complete the filing promptly after the authorised share capital is increased to ensure statutory compliance and avoid unnecessary delays in future corporate actions.
Documents Required for Increasing Authorised Share Capital and Filing Form SH-7
Before filing Form SH-7 with the Registrar of Companies (ROC), a company should ensure that all necessary corporate approvals have been obtained and the prescribed documents are readily available. The exact documents required may vary depending on the nature of the company, its constitutional documents, and the reason for increasing the authorised share capital. However, the following documents are generally required for increasing authorised share capital and completing the statutory filing:
1. Board Resolution
A certified copy of the Board Resolution approving the proposal to increase the authorised share capital, convene a general meeting (where required), and authorise the filing of the necessary forms with the Registrar of Companies.
2. Shareholders’ Resolution
A certified copy of the Ordinary Resolution or Special Resolution, as applicable, passed by the shareholders approving the increase in authorised share capital in accordance with the Companies Act, 2013 and the company’s constitutional documents.
3. Altered Memorandum of Association (MoA)
A copy of the Memorandum of Association reflecting the revised authorised share capital after alteration of the capital clause.
4. Altered Articles of Association (AoA)
Where the existing Articles of Association do not authorise an increase in authorised share capital or otherwise require amendment, a copy of the altered Articles of Association should also be kept ready and filed wherever applicable.
5. Notice of the General Meeting
The notice convening the shareholders’ meeting, together with the explanatory statement, wherever required under the Companies Act, 2013.
6. Minutes of the General Meeting
The minutes recording the proceedings of the shareholders’ meeting at which the resolution for increasing the authorised share capital was passed.
7. Form SH-7
A duly completed Form SH-7 (Notice to Registrar of any alteration of share capital) containing the prescribed particulars relating to the increase in authorised share capital.
8. Payment of ROC Fees and Applicable Stamp Duty
Proof of payment of the prescribed ROC filing fees and the applicable stamp duty on increase in authorised share capital, as calculated in accordance with the stamp duty law of the State or Union Territory where the company’s registered office is situated. The payment is ordinarily made electronically through the MCA portal during the filing of Form SH-7.
9. Digital Signature Certificate (DSC)
A valid Digital Signature Certificate of the authorised signatory for signing and submitting Form SH-7 electronically.
10. Other Supporting Documents
Depending on the facts of the case and the requirements of the Registrar of Companies, additional documents may be required, including:
- Copy of the existing Memorandum and Articles of Association.
- Consent or authorisation in favour of the person filing the form.
- Any approval required under a shareholders’ agreement or investment agreement.
- Other documents as may be required under the Companies Act, 2013 or directed by the Registrar of Companies.
Practical Compliance Checklist
Before filing Form SH-7, companies should verify the following:
✓ The Articles of Association authorise an increase in authorised share capital.
✓ The Board of Directors has approved the proposal.
✓ The shareholders have passed the necessary resolution.
✓ The Memorandum of Association has been appropriately altered.
✓ Form SH-7 has been completed accurately.
✓ The applicable ROC filing fees have been calculated.
✓ The correct stamp duty on increase in authorised share capital has been determined based on the State or Union Territory where the registered office is situated.
✓ The Digital Signature Certificate is valid and active.
✓ All supporting documents are complete and ready for upload.
Preparing these documents in advance helps ensure timely filing of Form SH-7, reduces the likelihood of resubmission by the Registrar of Companies, and facilitates smooth compliance with both the Companies Act, 2013 and the applicable stamp duty laws.
State-wise Stamp Duty on Increase in Authorised Share Capital in India
The rate of stamp duty on increase in authorised share capital is not uniform throughout India. Although the procedure for increasing authorised share capital is governed by the Companies Act, 2013, the applicable stamp duty is determined by the stamp duty law of the State or Union Territory in which the company’s registered office is situated. Accordingly, companies registered in different States may be liable to pay different amounts of stamp duty even where the increase in authorised share capital is identical. The Ministry of Corporate Affairs (MCA) collects the applicable stamp duty electronically while processing Form SH-7, based on the State-specific stamp duty rules.
The table below provides a quick overview of the stamp duty applicable on Form SH-7 for companies having share capital. The detailed explanation for each State and Union Territory is provided immediately thereafter.
| State / Union Territory | Stamp Duty on Increase in Authorised Share Capital (SH-7) |
|---|---|
| Andhra Pradesh | The stamp duty on increase in authorised share capital in Andhra Pradesh is 0.15% of the amount of increase, subject to a minimum of ₹1,000 and a maximum of ₹5 lakh |
| Arunachal Pradesh | The stamp duty payable on an increase in the authorised share capital for companies registered in Arunachal Pradesh is Nil according to standard state schedule listings for alterations of Articles of Association or capital increase instruments.
Even when state stamp duty is nil, you must still file e-Form SH-7 with the Ministry of Corporate Affairs (MCA) Portal within 30 days of passing the ordinary or special resolution, along with applicable MCA registration fee fees. |
| Assam | The stamp duty on increase in authorised share capital in in Assam is Nil according to standard state schedule listings for alterations of Articles of Association or capital increase instruments.
Even when state stamp duty is nil, you must still file e-Form SH-7 with the Ministry of Corporate Affairs (MCA) Portal within 30 days of passing the ordinary or special resolution, along with applicable MCA registration fee fees. |
| Bihar | The stamp duty on increase in authorised share capital in Bihar is higher of ₹1,000 or 0.15% of the amount of increase, subject to a maximum of ₹5 lakh |
| Chhattisgarh | See detailed State section below |
| Goa | See detailed State section below |
| Gujarat | The stamp duty on Increase in Authorised Share Capital in Gujarat In Gujarat is 0.15% of the net increase in the authorized capital, subject to a maximum cap of ₹25,00,000. |
| Haryana | The stamp duty on increase in authorised share capital in Haryana is ₹120 if the total authorised capital after the increase is up to ₹1 lakh, and nil (no additional stamp duty) if the authorised capital is greater than ₹1 lakh |
| Himachal Pradesh | Nil |
| Jharkhand | Nil |
| Karnataka | The stamp duty on increase in authorised share capital in Karnataka is Rs. 1,000 for every Rs. 5 lakhs of the increase in authorised capital, subject to a maximum cap of Rs. 25,00,000. |
| Kerala | |
| Madhya Pradesh | |
| Maharashtra | The stamp duty on increase in authorised share capital in Maharashtra is ₹1,000 for every ₹5 lakh or part of the amount of increase, subject to a maximum of ₹50 lakh (no duty beyond authorised capital of ₹250 crore) |
| Manipur | |
| Meghalaya | |
| Mizoram | |
| Nagaland | |
| Odisha | Nil |
| Punjab | Nil |
| Rajasthan | The stamp duty on increase in authorised share capital in Rajasthan is 0.2% of the amount of increase, subject to a maximum of ₹25 lakh |
| Sikkim | |
| Tamil Nadu | |
| Telangana | The stamp duty on increase in authorised share capital in Telangana is 0.15% of the amount of increase, subject to a minimum of ₹1,000 and a maximum of ₹5 lakh |
| Tripura | The stamp duty on increase in authorised share capital in Uttar Pradesh |
| Uttar Pradesh | |
| Uttarakhand | |
| West Bengal | |
| Andaman & Nicobar Islands | |
| Chandigarh | |
| Dadra & Nagar Haveli and Daman & Diu | |
| Delhi | The stamp duty on an increase in authorised share capital in Delhi is 0.15% of the amount of increase, subject to a maximum of ₹25 lakh |
| Jammu & Kashmir | |
| Ladakh | |
| Lakshadweep | |
| Puducherry |
Important Note: The above table is a quick reference. Companies should always refer to the detailed State-wise explanation below because the method of computation, minimum duty, maximum ceiling, exemptions, and special conditions differ from one State or Union Territory to another. The information is based on the State-wise e-stamp rules applicable to Form SH-7 through the MCA portal.
Frequently Asked Questions (FAQs)
Q. What is stamp duty on increase in authorised share capital?
Stamp duty on increase in authorised share capital is the stamp duty payable when a company increases the maximum amount of share capital it is authorised to issue by altering the capital clause of its Memorandum of Association. The duty is generally payable while filing Form SH-7 with the Registrar of Companies and is determined according to the stamp duty law applicable to the State or Union Territory where the company’s registered office is situated.
Q. Is stamp duty mandatory on increase in authorised share capital?
Yes. Where the applicable stamp duty law of the relevant State or Union Territory prescribes stamp duty on an increase in authorised share capital, payment of the applicable duty is mandatory before or at the time of filing Form SH-7 with the Registrar of Companies.
Q. Which law governs stamp duty on increase in authorised share capital?
The corporate procedure for increasing authorised share capital is governed by the Companies Act, 2013. However, the levy and rate of stamp duty are governed by the applicable stamp duty law of the State or Union Territory in which the company’s registered office is situated.
Q. Is the stamp duty rate the same throughout India?
No. Stamp duty is not uniform across India. Every State and Union Territory may prescribe its own rate, method of calculation, exemptions, and maximum limit. Therefore, companies registered in different States may be liable to pay different amounts of stamp duty for the same increase in authorised share capital.
Q. How is stamp duty on increase in authorised share capital calculated?
As a general rule, stamp duty is calculated on the amount by which the authorised share capital is increased and not on the company’s total authorised share capital after the increase. The applicable rate depends upon the State or Union Territory where the company’s registered office is located.
Q. Is stamp duty payable on the total authorised share capital?
No. In most cases, stamp duty is payable only on the incremental increase in authorised share capital and not on the total authorised share capital of the company after the increase.
Q. Which ROC form is required for increasing authorised share capital?
A company is generally required to file Form SH-7 (Notice to Registrar of any alteration of share capital) with the Registrar of Companies after increasing its authorised share capital.
Q. What is the time limit for filing Form SH-7?
Form SH-7 should ordinarily be filed with the Registrar of Companies within 30 days of the alteration of the authorised share capital, in accordance with the Companies Act, 2013.
Q. Is Form MGT-14 also required?
Depending upon the nature of the resolution passed and the provisions applicable to the company, filing Form MGT-14 may also be required. Companies should examine the applicable provisions of the Companies Act, 2013 and the relevant rules before completing the ROC filings.
Q. How is the applicable State determined for stamp duty purposes?
The applicable stamp duty is determined based on the State or Union Territory in which the company’s registered office is situated. The MCA portal applies the relevant stamp duty rate for that jurisdiction during the filing of Form SH-7.
Q. Is there a maximum limit on stamp duty?
Many States and Union Territories prescribe a maximum ceiling on the stamp duty payable for an increase in authorised share capital. However, the maximum limit varies from one jurisdiction to another and should be verified under the applicable stamp duty law.
Q. Can a company increase its authorised share capital multiple times?
Yes. A company may increase its authorised share capital more than once, provided it complies with the requirements of the Companies Act, 2013 and pays the applicable stamp duty for each increase, wherever required.
Q. Does increasing authorised share capital automatically issue new shares?
No. Increasing authorised share capital merely increases the company’s legal capacity to issue shares. The actual issue or allotment of shares requires separate compliance with the provisions of the Companies Act, 2013.
Q. Is stamp duty payable if the company does not increase its authorised share capital?
No. If the company issues shares within its existing authorised share capital without increasing the authorised capital, stamp duty on increase in authorised share capital is generally not payable. However, other statutory compliances may still apply depending on the transaction.
Q. Where can I find the stamp duty rate applicable to my State?
The applicable rate depends on the location of the company’s registered office. The State-wise Stamp Duty Rates section of this guide explains the stamp duty payable on increase in authorised share capital for every State and Union Territory in India.
Conclusion
Understanding the stamp duty on increase in authorised share capital is an essential part of corporate compliance for every company proposing to expand its capital base. While the procedure for increasing authorised share capital is governed by the Companies Act, 2013, the amount of stamp duty payable depends upon the stamp duty law applicable in the State or Union Territory where the company’s registered office is situated. As a result, companies must carefully determine the applicable rate, method of calculation, maximum stamp duty, and filing requirements before submitting Form SH-7 to the Registrar of Companies.
This guide has explained the legal framework, the circumstances in which stamp duty becomes payable, the method of calculation, practical examples, ROC filing requirements, and the documents generally required for increasing authorised share capital. It also provides a comprehensive State-wise and Union Territory-wise reference to help companies, directors, chartered accountants, company secretaries, lawyers, and other professionals identify the applicable stamp duty on increase in authorised share capital based on the location of the company’s registered office.
Since stamp duty laws and notifications may be amended from time to time, companies should verify the latest position before undertaking any capital restructuring. Where there is any uncertainty regarding the applicable stamp duty, the interpretation of the relevant State law, or the filing requirements under the Companies Act, obtaining professional legal or corporate compliance advice can help avoid delays, additional costs, and future regulatory issues.
The information in this article is general in nature and should not be relied upon as legal advice. If you require any further information, you may reach out at hello@lawfluencers.com.