When you register a company, two kinds of government charges apply: the filing fee payable to the Ministry of Corporate Affairs (MCA), and stamp duty payable to the state government on the Memorandum of Association (MoA) and Articles of Association (AoA). The filing fee is set centrally. Stamp duty is not. It depends on the state where the registered office is located, and in Tamil Nadu the rules changed in 2023. This post explains how the duty works for a Tamil Nadu company, and how SPICe+ calculates and collects it.
Why is stamp duty payable on the MoA and AoA?
The MoA and AoA are instruments under the Indian Stamp Act, 1899. The Act's Schedule I lists them separately, and each state can amend the rates in its application to that state. That is why two companies with the same capital can pay different stamp duty depending on whether their registered office is in Chennai, Bengaluru or Mumbai.
For our purposes the key point is simple: the registered office state decides the rate. If your registered office is in Anna Nagar, Guindy, Coimbatore or anywhere else in Tamil Nadu, the Tamil Nadu schedule applies, even if some of the founders live elsewhere.
What changed in Tamil Nadu in 2023?
The Indian Stamp (Tamil Nadu Amendment) Act, 2023 revised several articles of Schedule I as it applies in Tamil Nadu. As introduced in the Tamil Nadu Legislative Assembly (L.A. Bill No. 10 of 2023, published in the Tamil Nadu Government Gazette Extraordinary dated 17 April 2023), the relevant entries read as follows:
| Instrument | Tamil Nadu entry after the 2023 amendment |
|---|---|
| Article 39: Memorandum of Association of a company | Two hundred rupees |
| Article 10: Articles of Association of a company | Five hundred rupees on every ten lakh rupees of authorised capital or part thereof, subject to a maximum of rupees five lakh |
| Exemption (both articles) | MoA and AoA of an association not formed for profit and registered under the Companies Act, 2013 |
Stamp rates can be revised again by the state, so treat these figures as a guide and verify the current amount before filing. The amount that SPICe+ computes in its stamp duty block is what you will actually pay. The Tamil Nadu Registration Department's portal, TNREGINET, is the state's official site for stamp and registration matters.
How the AoA slab works in practice
Because the AoA entry is charged per ten lakh rupees of authorised capital or part of it, the duty steps up in slabs rather than rising smoothly. Reading the entry above:
- Authorised capital of one lakh or ten lakh rupees falls in the first slab
- Authorised capital of fifteen lakh rupees covers two slabs (ten lakh plus a part of the next ten lakh)
- The duty on the AoA cannot exceed the five lakh rupee cap, however large the capital
The MoA duty is a flat amount and does not depend on capital. Add the two together for the total stamp duty on incorporation documents, and confirm the figure in SPICe+ before paying.
Illustration: reading the entries for common capital amounts
Applying the 2023 entries as published, the stamp duty on incorporation documents for a Tamil Nadu company would work out as below. These are illustrations of the mechanism only; the figure SPICe+ shows at the time of filing is the one that counts.
| Authorised capital | AoA slabs of Rs. 10 lakh (or part) | AoA duty | MoA duty | Total |
|---|---|---|---|---|
| Rs. 1 lakh | 1 | Rs. 500 | Rs. 200 | Rs. 700 |
| Rs. 10 lakh | 1 | Rs. 500 | Rs. 200 | Rs. 700 |
| Rs. 15 lakh | 2 | Rs. 1,000 | Rs. 200 | Rs. 1,200 |
| Rs. 1 crore | 10 | Rs. 5,000 | Rs. 200 | Rs. 5,200 |
Two practical points follow. First, an authorised capital of Rs. 10 lakh and Rs. 1 lakh attract the same AoA duty under this entry, so there is no stamp duty saving in going below Rs. 10 lakh. Second, crossing a slab boundary by even a small amount adds a full slab, so Rs. 10.5 lakh costs the same as Rs. 20 lakh.
How SPICe+ computes and collects stamp duty
Part B of SPICe+ has a dedicated stamp duty block. Based on the state of the registered office and the authorised capital entered in the form, the system computes the duty payable on the MoA and AoA. According to the MCA's e-stamp FAQs:
- Stamp duty on SPICe+ Part B (including MoA and AoA), SH-7 and FC-1 must be paid electronically through MCA21, for every state except Sikkim
- The system prefills the stamp duty details; you do not calculate them manually
- A separate SRN and challan are generated for stamp duty, in addition to the MCA filing fee challan
- Processing does not start until both the filing fee and the stamp duty are paid and confirmed
- Decimal amounts are rounded up to the next rupee
- Once paid, the state cannot be changed; refunds are handled by the state government under its own rules
That last point matters. If you select the wrong state, the duty is credited to that state and cannot be transferred. Check the registered office state before you pay.
Choosing authorised capital with stamp duty in mind
Authorised capital is the ceiling on the shares a company can issue. It drives both the MCA filing fee (companies with authorised capital up to fifteen lakh rupees currently pay zero filing fee on SPICe+) and the Tamil Nadu AoA stamp duty. Founders sometimes set a high authorised capital to look established, but there is no legal minimum capital and no advantage in an inflated figure at the start.
A sensible approach is to set authorised capital a little above what you expect to issue in the first year or two, and increase it later when you raise funds. Our post on authorised versus paid-up capital explains the trade-off in more detail.
Stamp duty when you increase capital later
When authorised capital is increased, the company files SH-7 with the Registrar within thirty days of the alteration under section 64 of the Companies Act, 2013. Stamp duty on the increase is collected electronically through MCA21 at the same time, again computed by the system using the Tamil Nadu schedule. Building this into your fundraising plan avoids surprises. Ongoing filings like SH-7 are part of routine ROC compliances.
Other documents that attract stamp duty
The MoA and AoA are not the only instruments. Share certificates issued to subscribers, rent agreements for the registered office, and agreements between founders can also attract duty under the Tamil Nadu schedule. The rates and the method of payment differ by instrument, so check each one separately rather than assuming SPICe+ covers it.
Common mistakes with stamp duty
- Selecting the wrong state: the duty is credited to the state chosen and cannot be moved later
- Assuming another state's rate: online calculators often show rates for a different state or an outdated Tamil Nadu schedule
- Letting the challan lapse: if one of the two challans is not paid within its validity, the transaction is cancelled and any refund of stamp duty follows the state's procedure
- Ignoring the slab: picking an authorised capital just above a Rs. 10 lakh boundary without realising it adds a full slab
- Forgetting SH-7: raising authorised capital later without budgeting for the duty on the increase
Where this fits in the overall cost
Stamp duty is one part of the government cost of incorporation. Our post on government fees for company registration sets out the other statutory charges, and our guide to company registration in Chennai covers the full process from name approval to certificate of incorporation.
If you want help working out the stamp duty for your proposed capital structure, you can book a consultation with C S Rushil & Co.