Share transfer stamp duty in India is 0.015% of the price on every delivery-based transfer, whether the shares move off-market between demat accounts or on a physical SH-4 share transfer deed, and 0.005% on a fresh issue. This guide explains how the duty on a private company's shares is worked out and collected, which route your shares must take, and the deadlines around Form SH-4. Duty is charged on the price written in the transfer, not on face value, at the same rate in every state.
How is stamp duty on transfer of shares in a private company worked out?
Multiply the number of shares by the agreed price per share, then take 0.015% of the total. That is ₹150 for every ₹10 lakh of consideration. For 2,500 shares of ₹10 face value sold at ₹480 each, the consideration is ₹12,00,000 and the duty is ₹180.
- Face value does not matter. The same 2,500 shares sold at face value would carry duty on ₹25,000 instead, which is why the price in the transfer must be the real one.
- Small transfers run to paise. 37 shares at ₹113 each make ₹4,181, and the duty is ₹0.63. The calculator shows paise for this reason.
- Who pays. On an off-market or physical transfer the seller pays, unless buyer and seller agree otherwise (section 29 of the Indian Stamp Act). On a demat transfer the depository passes the duty to the state where the buyer lives.
- Gifts. For a transfer without consideration, how the duty applies depends on the facts, so check before you sign.
What changed on 1 July 2020?
From 1 July 2020, amendments made by the Finance Act 2019 put shares under one central rate in Article 56A of the Indian Stamp Act, with exchanges and depositories collecting the duty on trades and demat transfers. Before that, a physical transfer of unlisted shares paid 0.25% of its value. On the ₹12,00,000 example, that is ₹3,000 then against ₹180 now.
The date itself moved more than once: S.O. 1226(E) of 30 March 2020 replaced the earlier date of 1 April 2020 with 1 July 2020. States cannot levy a separate duty on these transfers, unlike the duty on a company's MoA and AoA, which still varies by state (see the incorporation fee and stamp duty calculator). The current rates are in Schedule I of the Indian Stamp Act: 0.015% for a transfer on delivery basis, 0.005% for an issue and 0.003% for a non-delivery trade on an exchange.
Demat or physical: which route do your shares take?
It depends on whether your company is a small company. Rule 9B of the Companies (Prospectus and Allotment of Securities) Rules requires a private company that is not a small company to issue securities only in demat form, and its shareholders to dematerialise shares before transferring them. Private companies (not producer companies) that were not small on 31 March 2023 had until 30 June 2025, under G.S.R. 131(E).
| Point | Demat (off-market) transfer | Physical transfer on Form SH-4 |
|---|---|---|
| Who usually uses it | Private companies that are not small companies, and any company whose shares are already in demat | Small companies with share certificates |
| Instrument | Delivery instruction to the seller's depository participant, stating the price | SH-4 signed and dated by seller and buyer |
| How the duty is paid | The depository collects 0.015% before it moves the shares | E-stamp, franking or adhesive stamps on the SH-4, before or at signing |
| Company's role | No SH-4 needed between demat holders | Board approves and registers the transfer |
A company that has been a small company at every year end since 31 March 2023 is outside rule 9B and can still transfer physical shares on SH-4. The rule does not say a company leaves it on becoming small later, for example under the higher limits from 1 December 2025 (paid-up capital up to ₹10 crore and turnover up to ₹100 crore), so confirm your company's position before choosing the route. Moving shares into or out of demat form does not attract duty, because ownership does not change.
Form SH-4 deadlines: a dated example
The signed and stamped SH-4 must reach the company with the share certificate within 60 days of signing, and the company must deliver the registered certificate within one month of receiving it. If any requirement in sub-sections (1) to (5) of section 56 is not met, the company and each officer in default face a penalty of ₹50,000.
Example. Two co-founders of a small private company, both living in Pune, agree that one sells 10,000 shares to the other at ₹250 each. They sign the SH-4 on 5 November 2026 for ₹25,00,000. Stamp duty is ₹375, paid by the seller on the SH-4 before or at signing. The SH-4 and certificate must reach the company by 4 January 2027. If the company receives them on 20 November 2026, it must deliver the certificate by 20 December 2026.
Before signing, read the articles. A private company's articles usually restrict transfers, and any approval or right of first refusal they set has to be followed first.
What if the buyer or seller lives outside India?
The stamp duty stays at 0.015%, but the price is no longer a free choice. For an unlisted company, a resident selling to a non-resident cannot go below a fair value certified on an arm's length basis by a chartered accountant, SEBI-registered merchant banker or practising cost accountant, and a non-resident selling to a resident cannot go above it.
These pricing rules sit in the RBI Master Direction on foreign investment. Get the valuation before you fix the price in the SH-4 or the delivery instruction, and check whether the company's sector needs government approval with the FDI route checker.
Fresh issue vs transfer: how the duty differs
A fresh issue pays 0.005% of the issue value, a third of the transfer rate, and the company pays it instead of a shareholder. The issue value is the issue price including any premium, times the number of shares: 5,000 shares of ₹10 face value issued at ₹200 make ₹10,00,000, so the duty is ₹50.
For demat shares the depository collects the duty on allotment; for physical shares the company pays it to the state of its registered office. If the issue would take share capital past the limit in the memorandum, work out the SH-7 cost with the authorised capital increase calculator first.
Common mistakes with share transfer stamp duty
The most common mistake is stamping on face value instead of the agreed price, which leaves the instrument under-stamped. The next is still applying the old 0.25% rate, which overpays more than sixteen times. Both are avoided by entering the number of shares and the real price per share in the calculator.
- Physical transfer in a company that must be in demat. If rule 9B applies to the company, get the shares dematerialised before the transfer.
- Missing the 60-day window. Count 60 days from the date on the SH-4, not from the payment date.
- No paper trail. Keep the share purchase agreement and proof of payment with the company's records, whichever route you use.
How Ofin can help
Ofin's share transfer service starts at ₹2,147, covering the transfer deed, stamp duty and board approval. Tell us the number of shares, the price and where the buyer and seller live, and we will confirm the route, demat or SH-4, with a fixed quote before you pay.
