Stamping Out Arbitration: How Maharashtra's Stamp Duty Act Amendment Hampers Mumbai's Arbitration Aspirations

The Government of Maharashtra recently made radical amendments to the Maharashtra Stamp Duty Act, 1958, by enacting the Maharashtra Stamp Duty Act, 2024. The Maharashtra Stamp Duty Amendment: A Brief Overview The Maharashtra Stamp Act, 2024 amends Article 12 of the Maharashtra Stamp Act, which governs arbitral awards, by replacing the existing provision with the following: Particulars Stamp Duty Where the Award Pertains to Immovable Property The same duty as is leviable on a conveyance under clause of Article 25 Where the Award Relates to Moveable Property Where the award amount does not exceed rupees fifty lakhs 0.75 percent of the amount granted in the award Where the amount granted in the award exceeds rupees fifty lakhs but does not exceed rupees five crore Rupees thirty-seven thousand five hundred plus 0.5 percent of the amount granted in the award Where the amount granted in the award exceeds rupees five crore Two lakhs sixty-two thousand five hundred plus 0.25 per cent of the amount granted in the award A perusal of the amended provision makes it clear that arbitration in Mumbai will now be significantly more expensive. Global arbitration hubs such as London, Paris, and Singapore, do not impose stamp duty on arbitral awards—as evidenced by the United Kingdom's Stamp Act, 1891 and Arbitration Act, 1996; Articles 1442–1527 of the French Code de Procédure Civile which governs arbitration, and the Code Général des Impôts which governs levying of stamp duty; and the International Arbitration Act, Arbitration Act, and the Stamp Duties Act, 1929, which govern International and Domestic Arbitration and stamp duty in Singapore. Closer home, Delhi levies a stamp duty of 0.1 percent of the award amount where the amount exceeds ₹1,000 under the Indian Stamp Act, 1899, as amended by the Indian Stamp 2001. The Maharashtra Stamp Duty Amendment Act, by making arbitral awards subject to ad-valorem stamp duty, may increase revenue for the Government in the short term.