Stamp (Amendment) Ordinance 2020: An Overview

The COVID-19 pandemic has been catastrophic for the global economy. Being a major impediment to everyday life and causing grave health issues to a substantial number of individuals, the pandemic has taken an adverse toll on the economic stability of growing economies which will take decades to recover.

The entire world has been facing an economic turndown and many developed countries have formally asked international financial institutions for bailouts. As far as Pakistan is concerned, its overburdened economy is too fragile to afford the exorbitant after-effects of the pandemic, which will eventually paralyze businesses, industries, companies and institutions even further.

Although the government has been trying to respond to the constantly evolving situation, keeping a balance between the health crisis and the significant deceleration of local businesses seems to be immensely daunting.

In this regard, a notable step taken by the federal government has been the announcement of a relief package in favour of the construction sector in Pakistan. Following the instructions of the federal government, the Government of Punjab has amended the Stamp Duty Act 1899 by enacting the Stamp (Amendment) Ordinance 2020 and reducing stamp duties in various transactions as will be discussed below. Moreover, Punjab’s Cabinet has also formally approved the Amendment proposed by the Board of Revenue (BOR).

The main changes made to the Stamp Act 1899 can be found in Schedule 1 of the Act according to which rates of stamp duty on certain instruments have been reduced in the following manner:

Article 18 – the stamp duty on a Certificate of Sale in respect of immovable property in an urban area has been reduced from 5% to 1% of the value of the property.

Article 23 – the stamp duty applicable on Conveyance in respect of immovable property in an urban area has been reduced from 5% to 1% of the value of the property.

Article 27-A – the stamp duty applicable on a Decree in respect of immovable property in an urban area has been reduced from 5% to 1% of the value of the property.

Article 31 – the stamp duty applicable on an Exchange of immovable property in an urban area has been reduced from 5% to 1% of the highest value of the property and from 2% to 1% of the lowest value of the property.

Article 33 – the stamp duty applicable on a Gift of immovable property in an urban area has been reduced from 5% of the value of the property to 1%, and in any other case has been reduced from 3% to 1%.

Article 35 – the stamp duty applicable on a Lease, including both under-lease or sub-lease, is as follows:

    • where under such lease the rent is fixed and no premium is paid or delivered;
    • where the lease purports to be for a term of twenty years for immovable property situated in an urban area, the stamp duty has been reduced from 5.25% of average annual rent of the lease to 2%;
    • where the lease purports to be for a term in excess of 20 years or in perpetuity in case of an immovable property in an urban area, the stamp duty payable has been reduced from 5.25% of the consideration equal to the whole amount of rent to 2%;where the lease does not purport to be for any definite term in respect of immovable property in an urban area, the stamp duty applicable has been reduced from 5.25% of the consideration equal to the whole amount of the rent to 2%;
    • where the lease is granted for money advanced and no rent is reserved for immovable property in an urban area, the stamp duty applicable has been reduced from 5.25% to 2% of the consideration equal to the amount advanced and set forth in the lease;
    • where the lease is granted for a fine or premium and no rent is reserved for immovable property in an urban area, the stamp duty applicable has been reduced from 5.25% to 2% of the consideration equal to amount of such fine or premium set forth in the lease;
    • where the lease is granted for money advanced in addition to the rent reserved for immovable property in an urban area, the stamp duty applicable has been reduced from 5.25% to 2% equal to the amount of consideration set forth in the lease; and
    • where the lease is granted for a fine or premium in addition to the rent reserved for immovable property in an urban area, the stamp duty applicable has been reduced from 5.25% to 2% equal to amount of such fine or premium set forth in the lease.

Article 45 – the stamp duty on a Partition has been reduced from 2% of the amount of the value of the separated share or shares of the property to 1%.

Article 55 – the stamp duty on the Release of an immovable property in an urban area has been reduced from 5% of the amount of the claim or value of the property to 1%.

Article 58 – the stamp duty on a Settlement in the instrument, where the settlement has been made in favour of legal heirs with respect to agricultural land, has been reduced from 3% of the value of the property to 1%. Where the settlement is made for a religious or charitable purpose, stamp duty has been reduced from 3% of the consideration to 1%. In any other case, stamp duty has been reduced from 3% of the consideration or the value of the property to 1%. Where revocation is present, stamp duty has been reduced from 2% of the consideration or value of the property to 1%.

Article 63 – for a Transfer of Lease by way of assignment and not by way of under-lease for immovable property in an urban area, the stamp duty applicable has been reduced from 5% of the amount of the consideration to 1%.

Article 63-A – for a Transfer of Right or Interest relating to immovable property in an urban area, the stamp duty applicable has been reduced from 5% of the value of the property to 1%.

It appears that the above changes brought about by the government attempt to enable the construction sector to experience resurgence in the midst of a global health tragedy. The Amendment will provide relief to people looking to purchase immovable properties in urban areas without being charged excessive stamp duties as before. It will also help stabilize the economy and increase investment in the country in this crucial period.


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Abbas Hayat

Author: Abbas Hayat

The writer holds an LLB (Hons) degree from City, University of London and is a practising lawyer based in Lahore. He can be reached at [email protected]