The Bombay Stamp Act, 1958 (as applicable in Gujarat) has been amended by the Gujarat Stamp (Amendment) Act, 2025, as effective from April 10, 2025 (“Amendment”), to enact significant amendments to various provisions. Specifically, the Amendment has taken the first step in resolving a long-standing issue, i.e., the stamp duty rates applicable to concession agreements executed for the construction and development of road projects in India.

Over the last few years, courts in India have taken conflicting views while determining stamp duty payable on concession agreements. While in some cases the courts have held that concessions should be stamped as ‘general agreements’ (thereby attracting stamp duty at nominal rates), in other cases, courts have opined that concession agreements ought to be stamped as ‘lease agreements’, with a higher incidence of stamp duty charges. Most recently, the Supreme Court of India, in its judgment in Rewa Tollway Private Limited v. State of Madhya Pradesh^[1], held that a road concession agreement allowing collection of toll would fall within the definition of ‘lease’ under the Indian Stamp Act, 1899 (as applicable in Madhya Pradesh). The rationale behind the decision was that the definitions of ‘lease’ under the Transfer of Property Act, 1882 and the various stamp acts are fundamentally different from one another. When toll is collected for using a road while the underlying property is not leased out, the right to collect toll is, and such right would be a ‘lease’ for the purposes of determining stamp duty.^[2] In this regard, the Indian Stamp Act, 1899 defines ‘lease’ to include: “… (c) any instrument by which tolls of any description are let; and ….”.

However, these judicial precedents have not been able to resolve all concerns. For instance, even though toll may be collected by the concessionaire, some concession agreements include a requirement for the concessionaire to share the toll collected with the concessioning authority, making it difficult to ascertain whether the entire toll collection will be the basis for computing stamp duty, or whether the revenue shared with the concessioning authority ought to be deducted. Moreover, since the definitions of ‘lease’ under the stamp acts only refer to collection of toll, it appears that concession agreements based on annuity payments (such as all road projects developed under the hybrid annuity mode and build-operate-transfer annuity mode) would not be stamped as ‘lease agreements’. Several states have their own stamp legislations that have adopted definitions for the term ‘lease’ akin to the Indian Stamp Act, 1899, including the Bombay Stamp Act, 1958 and the Karnataka Stamp Act, 1957.

The Amendment has put an end to this conflict in Gujarat, by aligning all concessions and stipulating a specific stamp duty for all concessions. The new Article 5(g-c) in Schedule I of the Bombay Stamp Act, 1958 (as applicable in Gujarat) provides that the stamp duty applicable for projects under the build-operate-transfer system or any project built under other modes of public-private partnership (including hybrid annuity mode and build-operate-transfer annuity mode) which are not covered under any other existing article, whether with or without toll or free collection rights, shall be 0.10% of the amount agreed in the contract, subject to a  maximum of INR 25,00,000 and a minimum of INR 5,000. Further, the Amendment has also modified Section 30 (which allocates the responsibility on a party to pay stamp duty), providing that the obligation to pay stamp duty will be on the concessionaire, and not the concessioning authority. The notified copy of the Amendment may be accessed here.

Footnotes:
[1] 2024 INSC 539
[2] Uppalapati Durga Prasad v. Executive Engineer (R&B) N.H Division, Srikakulam and Ors. (AIR 2001 AP 442); Abhijit Infrastructure Private Limited v. the Joint District Registrar and another (2020 SCC OnLine Bom 394)