The incidence of stamp duty is an important consideration for the planning of any merger. Discuss the stamp duty payable when amalgamation is between a holding company and a subsidiary company.

Amalgamation between a Holding and a Subsidiary company is exempt from the payment of Stamp Duty subject to certain conditions. These conditions are as under: When at least 90% of the issued capital of the transferee company is in the beneficial ownership of the transferor company, or When the transfer is between a parent and a subsidiary company, one of which is a beneficial owner of not less than 90% of the issued share capital of the other, or When the transfer takes place between two subsidiary companies each of which is having not less than 90% of the share capital in the beneficial ownership of the parent company. Stamp duty being a State subject, these exemptions will be applicable only in those States where the State Government follows the notification of the Central Government in this regard. Stamp duty on transfer of assets is governed by the relevant State Stamp Act. In terms of stamp duty, though the State laws provide for rates of stamp duty to be paid on various instruments, it is observed that generally there is no specific entry for a High Court (now NCLT) order sanctioning the scheme of amalgamation or demerger, in the absence of which High Courts have taken the view that the High Court (now NCLT) order involving the transfer between two juristic persons of certain movable and immovable property, is a 'conveyance' and should therefore be chargeable to stamp duty.