Sections 7 and 8 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Sections 7 and 8 of the Indian Stamp Act, 1899 deal with two unrelated subjects. Section 7 is now a single sub-section on sea-insurance that covers both a voyage and time. Section 8 sets a special duty of one per centum on loans raised by a local authority through bonds, debentures or other securities, and says those securities need not be stamped.
Section 7 is left with sub-section (4) only: a sea-insurance policy made for a voyage and also for time, or extending more than thirty days after the ship has arrived and been moored, is charged as a voyage policy and also as a time policy. Section 8 makes a local authority raising a loan by bonds or debentures chargeable with one per centum on the total amount issued, exempts the securities themselves from stamping, and provides a forfeiture of ten per centum of the duty for wilful neglect.
How to read this article
This article is based on the consolidated text of the Act consulted (latest amendment shown: Act 13 of 2021); later amendments should be checked. It explains the central Act only. Stamp duty on most instruments is fixed by the law and schedule of the State where the instrument is executed, so the State must be checked for any duty not covered by these two sections; policies of insurance are among the instruments for which section 9(2)(a) names the Central Government as "the Government". If you are structuring a loan raised by a body such as a municipality, a short legal consultation can help you see which provisions apply.
Section 7: policies of sea-insurance
The heading of section 7 is "Policies of sea-insurance". In the copy consulted, sub-sections (1) to (3) are shown as repealed by Act 11 of 1963, section 92, with effect from 1 August 1963. Only sub-section (4) remains, and nothing is said here about what the earlier sub-sections provided.
Sub-section (4) reads: "Where any sea-insurance is made for or upon a voyage and also for time, or to extend to or cover any time beyond thirty days after the ship shall have arrived at her destination and been there moored at anchor, the policy shall be charged with duty as a policy for or upon a voyage, and also with duty as a policy for time."
So there are two triggers, and either is enough:
- the insurance is made for a voyage and also for time; or
- the insurance extends to or covers any time beyond thirty days after the ship has arrived at her destination and been there moored at anchor.
The result is a double charge: the policy is charged "as a policy for or upon a voyage" and also "as a policy for time". The section gives no figures; the Schedule I entries for the policy are explained in the article on the policy of insurance Article. What counts as sea-insurance is set by section 2(20), covered in the sibling article on the insurance and bill definitions.
Section 8: loans raised by a local authority
The heading is "Bonds, debentures or other securities issued on loans under Act XI of 1879". The "Act XI of 1879" is the Local Authorities Loan Act, 1879, as the text prints it; that old Act is not explained here and the reader should check the current law for the corresponding provision.
Section 8(1): one per centum, and no stamping
"Notwithstanding anything in this Act", a local authority raising a loan under the provisions of the Local Authorities Loan Act, 1879 "or, of any other law for the time being in force", by the issue of bonds, debentures or other securities, is chargeable in respect of that loan with duty of one per centum on the total amount of the bonds, debentures or other securities issued by it. The footnote shows "one per centum" was substituted by Act 6 of 1910, section 2, for "eight annas per centum".
The same sub-section adds that such bonds, debentures or other securities "need not be stamped and shall not be chargeable with any further duty on renewal, consolidation, sub-division or otherwise". The duty is therefore paid once, by the local authority, on the total issued, and the securities themselves are not stamped one by one.
Section 8(2): outstanding loans and the proviso
Sub-section (2) extends the exemption from stamping and from further duty to "the bonds, debentures or other securities of all outstanding loans of the kind mentioned therein", and says all such securities "shall be valid, whether the same are stamped or not". The proviso is narrow: nothing in it exempts the local authority from duty chargeable "prior to the twenty-sixth day of March, 1897", where that duty has not already been paid or "remitted by order issued by the Central Government".
Section 8(3): forfeiture for wilful neglect
"In the case of wilful neglect to pay the duty required by this section", the local authority is liable to forfeit to the Government "a sum equal to ten per centum upon the amount of duty payable, and a like penalty for every month after the first month during which the neglect continues." The trigger the section names is wilful neglect. The text consulted does not say how the forfeiture is imposed or recovered.
Key figures at a glance
| Provision | Figure printed in the text |
|---|---|
| s.7(4) | thirty days after the ship has arrived and been moored at anchor |
| s.8(1) | one per centum on the total amount issued |
| s.8(2) proviso | duty chargeable prior to the twenty-sixth day of March, 1897 not exempted |
| s.8(3) | ten per centum of the duty payable, and a like penalty for each month after the first |
A worked example using the section's own figures
Greenfield Municipal Corporation raises a loan of Rs 10 crore under the 1879 Act by issuing bonds. Under section 8(1), the duty is one per centum on the total issued, that is Rs 10 lakh, paid by the Corporation. The bonds need not be stamped individually, and a later renewal or sub-division of the bonds attracts no further duty. If the Corporation wilfully neglects to pay the Rs 10 lakh, section 8(3) makes it liable to forfeit ten per centum of the duty, Rs 1 lakh, and a like amount for every month after the first month in which the neglect continues. This uses only the rate printed in the section; whether a particular State law applies to a particular local authority is for the State where the loan is raised.
For a sea-insurance case: a cargo owner takes a policy covering a voyage from Chennai to Rotterdam and also for 45 days after the vessel is moored at the port of arrival. Because it covers time beyond thirty days after arrival and mooring, section 7(4) treats it as a voyage policy and also as a time policy.
Need help with a loan or insurance structure?
If you are preparing a bond issue, a debenture programme or an insurance arrangement and want the duty questions mapped before the documents are signed, a legal consultation can set out the provisions to check and the points where the State's law takes over.
Key takeaways
- Section 7 is reduced to sub-section (4): a voyage-and-time sea policy is charged as both.
- A sea policy covering more than thirty days after arrival and mooring is also charged both ways.
- Section 8 charges one per centum on the total of loan securities issued by a local authority.
- Those securities need not be stamped and carry no further duty on renewal, consolidation or sub-division.
- Wilful neglect brings a forfeiture of ten per centum of the duty, with a like penalty for each month after the first.
- The 1879 Act and the proviso's date are quoted as printed; check the current law.
Read next
- Section 6 of the Indian Stamp Act, 1899: instrument falling under several descriptions
- Section 8A of the Indian Stamp Act, 1899: securities issued to and held through a depository
- Section 9 of the Indian Stamp Act, 1899: power to reduce, remit or compound stamp duty
- Stamp duty on bond and debenture
Disclaimer: Based on the consolidated text of the Indian Stamp Act, 1899 published by the Department of Revenue, whose latest amendment shown is Act 13 of 2021, as consulted on 2 October 2026. Only the central text is covered: stamp duty on most instruments is fixed by the law and schedule of the State where the instrument is executed, and State amendments, rules, notifications and later amendments should be checked. This article is general information, not legal advice; check the official text before acting.