The term debenture has been defined under Section 2(30) of the Companies Act, 2013 to include debenture stock, bonds or any other instrument of a company evidencing a debt, whether constituting a charge on the assets of the company or not.

The term Debenture has not been defined under the Act. The term “Debenture” has only been specified in List I of the Act which reads as under:

Art. 27 of stamp Act. DEBENTURE (where a mortgage debenture or not), being marketable security transferable-

a. By endorsement or by a separate instrument of transfer

b. By delivery

Explanation – The term “Debenture” includes any interest coupons attached thereto but the amount of such coupons shall not be included in estimating the duty.

Exemption

A debenture issued by an incorporated company or other body corporate in terms of a registered mortgage deed, duly stamped in respect of the full amount of debentures to be issued thereunder, whereby the company or body borrowing makes over, in whole or in the party, their property to trustees for the benefit of the debentures holder:

Provided that the debentures so issued are express to be issued are expressed to be issued in terms of the said mortgage deed.

0.05% per year of the face value of the debenture, subject to the maximum of 0.25% or rupees twenty-five lakhs whichever.

In terms of the provision, for Debenture to attract levy of stamp duty it needs to be a “Marketable Security” transferable by endorsement or by a separate instrument of transfer or by delivery.

A company issuing debentures is required to pay stamp duty only if debentures are treated as “marketable security”. Hence, it is important to analyse the expression “marketable security”.

Please, anyone, clear the same if need to pay and how to pay?