Maharashtra Overhauls Stamp Duty on Bank Guarantees, Offers Relief to Industry

The Maharashtra government has introduced a significant amendment to the Maharashtra Stamp Act (1958), bringing bank guarantees under a separate, independent category for stamp duty purposes. The move aims to simplify the taxation structure and reduce the financial burden on businesses involved in commercial transactions, government contracts, and infrastructure projects.

Revenue Minister Chandrashekhar Bawankule presented the bill in the Legislative Assembly, which was passed on [date]. The amendment eliminates the earlier practice of levying stamp duty on bank guarantees under Article 54 as 'security bonds', which required full duty payment each time a guarantee was renewed or its validity extended, even if the guaranteed amount remained unchanged.

Under the new rules, stamp duty will be charged according to a newly created independent category, ensuring a more straightforward and transparent process. Bawankule stated that this reform will provide significant financial relief to the trade and industry sector and is expected to boost the use of bank guarantees. The increased usage is anticipated to positively impact government revenue.

The old system was criticised for its cumbersome nature, as it imposed full stamp duty on renewals, effectively taxing the same guarantee multiple times. The amendment addresses this inefficiency, aligning with the state's ease of doing business initiatives.

The bill's passage marks a step forward in streamlining tax administration and supporting economic activity in Maharashtra.