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      Question

      Section 5(1A) of the SARFAESI Act (inserted by the 2016

      Amendment) provides for exemption from stamp duty on documents executed by a bank in favour of an ARC for acquisition of financial assets. This exemption is available under which provision of the Indian Stamp Act, 1899?
      A Section 3 of the Indian Stamp Act, 1899 Correct Answer Incorrect Answer
      B Section 4 of the Indian Stamp Act, 1899 Correct Answer Incorrect Answer
      C Section 8F of the Indian Stamp Act, 1899 Correct Answer Incorrect Answer
      D Section 10 of the Indian Stamp Act, 1899 Correct Answer Incorrect Answer
      E Section 17 of the Indian Stamp Act, 1899 Correct Answer Incorrect Answer

      Solution

      Section 5(1A), inserted by Act 44 of 2016, expressly provides that any document executed by any bank or financial institution under Section 5(1) in favour of the ARC for the purpose of asset reconstruction or securitisation shall be exempted from stamp duty in accordance with the provisions of Section 8F of the Indian Stamp Act, 1899. The proviso clarifies that this exemption does NOT apply where the acquisition of financial assets by the ARC is for purposes other than asset reconstruction or securitisation. This stamp duty exemption was introduced to reduce transaction costs involved in stressed asset sales and to encourage the market for distressed debt. Section 8F of the Stamp Act was specifically inserted to give effect to this exemption.

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