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Stamp Duty Law: Stamp Duty on Insurance Policies

Description: This quiz covers the provisions of the Stamp Duty Law related to insurance policies in India. It aims to assess your understanding of the applicable stamp duty rates, exemptions, and relevant legal aspects.
Number of Questions: 15
Created by:
Tags: stamp duty law insurance policies stamp duty rates exemptions legal aspects
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What is the primary legislation governing stamp duty on insurance policies in India?

  1. The Indian Stamp Act, 1899

  2. The Insurance Act, 1938

  3. The Stamp Duty Act, 2007

  4. The Finance Act, 2020

Show answer
Correct Option: A
Explanation:

The Indian Stamp Act, 1899, serves as the primary legislation that governs stamp duty on insurance policies in India.

Which of the following insurance policies is exempt from stamp duty under the Indian Stamp Act, 1899?

  1. Life insurance policies

  2. Health insurance policies

  3. Motor insurance policies

  4. Fire insurance policies

Show answer
Correct Option: A
Explanation:

Life insurance policies are specifically exempted from stamp duty under the Indian Stamp Act, 1899.

What is the applicable stamp duty rate for general insurance policies in India?

  1. 0.5%

  2. 1%

  3. 1.5%

  4. 2%

Show answer
Correct Option: B
Explanation:

The applicable stamp duty rate for general insurance policies in India is 1% of the sum insured.

In case of multiple insurance policies covering the same subject matter, how is stamp duty calculated?

  1. Duty is payable on each policy separately

  2. Duty is payable only on the policy with the highest sum insured

  3. Duty is payable on the aggregate sum insured of all policies

  4. Duty is payable on the average sum insured of all policies

Show answer
Correct Option: C
Explanation:

Stamp duty is payable on the aggregate sum insured of all insurance policies covering the same subject matter.

What is the consequence of not paying stamp duty on an insurance policy in India?

  1. The policy is void and unenforceable

  2. The policy is valid but cannot be renewed

  3. A penalty is imposed on the policyholder

  4. The policyholder is liable for prosecution

Show answer
Correct Option: C
Explanation:

Failure to pay stamp duty on an insurance policy in India attracts a penalty, as per the provisions of the Indian Stamp Act, 1899.

Which of the following documents is required to be submitted along with an insurance policy for stamp duty payment?

  1. Proposal form

  2. Policy schedule

  3. Certificate of insurance

  4. Premium payment receipt

Show answer
Correct Option: B
Explanation:

The policy schedule, which contains details of the insurance policy, is required to be submitted along with the policy for stamp duty payment.

What is the time limit for payment of stamp duty on an insurance policy in India?

  1. 15 days from the date of issuance of the policy

  2. 30 days from the date of issuance of the policy

  3. 60 days from the date of issuance of the policy

  4. 90 days from the date of issuance of the policy

Show answer
Correct Option: B
Explanation:

Stamp duty on an insurance policy in India must be paid within 30 days from the date of issuance of the policy.

Can stamp duty on an insurance policy be paid online in India?

  1. Yes, through the e-stamping portal

  2. Yes, through the insurance company's website

  3. No, it must be paid in person at a stamp duty office

  4. No, it must be paid by post

Show answer
Correct Option: A
Explanation:

Stamp duty on an insurance policy in India can be conveniently paid online through the e-stamping portal.

Which authority is responsible for collecting stamp duty on insurance policies in India?

  1. The Insurance Regulatory and Development Authority of India (IRDAI)

  2. The Central Board of Direct Taxes (CBDT)

  3. The State Stamp Duty Authorities

  4. The Ministry of Finance

Show answer
Correct Option: C
Explanation:

The State Stamp Duty Authorities are responsible for collecting stamp duty on insurance policies in India.

What is the legal basis for the exemption of life insurance policies from stamp duty in India?

  1. Section 4 of the Indian Stamp Act, 1899

  2. Section 8 of the Insurance Act, 1938

  3. Section 10 of the Finance Act, 2020

  4. Section 12 of the Stamp Duty Act, 2007

Show answer
Correct Option: A
Explanation:

Section 4 of the Indian Stamp Act, 1899, specifically exempts life insurance policies from stamp duty.

In case of an insurance policy covering multiple risks, how is stamp duty calculated?

  1. Duty is payable on each risk separately

  2. Duty is payable only on the risk with the highest premium

  3. Duty is payable on the aggregate premium of all risks

  4. Duty is payable on the average premium of all risks

Show answer
Correct Option: C
Explanation:

Stamp duty on an insurance policy covering multiple risks is calculated based on the aggregate premium of all risks.

What is the consequence of paying stamp duty on an insurance policy after the prescribed time limit in India?

  1. The policy is void and unenforceable

  2. The policy is valid but cannot be renewed

  3. A penalty is imposed on the policyholder

  4. The policyholder is liable for prosecution

Show answer
Correct Option: C
Explanation:

Paying stamp duty on an insurance policy after the prescribed time limit in India attracts a penalty, as per the provisions of the Indian Stamp Act, 1899.

Which of the following is not a valid mode of payment for stamp duty on insurance policies in India?

  1. Cash

  2. Cheque

  3. Demand draft

  4. Credit card

Show answer
Correct Option: D
Explanation:

Credit card is not a valid mode of payment for stamp duty on insurance policies in India.

What is the purpose of affixing a stamp duty stamp on an insurance policy?

  1. To indicate that stamp duty has been paid

  2. To validate the policy

  3. To prevent forgery

  4. To provide security to the policyholder

Show answer
Correct Option: A
Explanation:

Affixing a stamp duty stamp on an insurance policy serves as an indication that stamp duty has been duly paid.

Can stamp duty on an insurance policy be refunded in India?

  1. Yes, if the policy is canceled within a certain period

  2. Yes, if the policy is surrendered within a certain period

  3. No, stamp duty is non-refundable

  4. No, stamp duty is refundable only in exceptional circumstances

Show answer
Correct Option: C
Explanation:

Stamp duty paid on an insurance policy in India is generally non-refundable.

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