For a mining lease, where the value of the subject matter is indeterminate at the time of execution, stamp duty is chargeable on the basis of the estimated or anticipated royalty under the proviso to Section 26 of the Indian Stamp Act, 1899, and not merely on the basis of dead rent. Dead rent constitutes only the minimum guaranteed payment under the lease, whereas anticipated royalty reflects the estimated economic value of the mining rights and is the statutory yardstick for determining stamp duty. 2026 INSC 738.

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Indian Stamp Act, 1899 – Section 26 – Mining Lease – Stamp Duty – Whether stamp duty on a mining lease is to be computed on the basis of dead rent or anticipated royalty? – Held, Anticipated royalty.

The appellant was granted a mining lease for extraction of limestone by the State of Madhya Pradesh. At the time of execution of the lease, the Collector demanded stamp duty computed on the basis of the anticipated royalty payable under the lease instead of the dead rent. The appellant challenged the demand contending that stamp duty could be levied only on the basis of dead rent, which alone was ascertainable at the time of execution of the lease, and that the executive circular prescribing anticipated royalty was without statutory authority. Whether stamp duty payable on a mining lease is to be calculated on the basis of dead rent or anticipated royalty? – Held, Anticipated royalty.

The Supreme Court held that Section 26 of the Indian Stamp Act specifically deals with instruments where the value of the subject matter is indeterminate at the time of execution. In the case of a mining lease, the proviso to Section 26 expressly provides that stamp duty shall be computed on the basis of the estimated or anticipated royalty, to be assessed by the Collector where the Government is the lessor. "Dead rent" is merely the minimum guaranteed payment based on the leased area, whereas "royalty" represents the actual economic value of the lease, being directly linked to the quantity of minerals likely to be extracted. The statutory Form-K prescribed under the Mineral Concession Rules also expressly stipulates that anticipated royalty shall be the basis for computation of stamp duty. The executive circular was consistent with the statutory scheme and valid. Accordingly, the demand of stamp duty based on anticipated royalty was upheld and the appeal was dismissed.

Ratio Decidendi

For a mining lease, where the value of the subject matter is indeterminate at the time of execution, stamp duty is chargeable on the basis of the estimated or anticipated royalty under the proviso to Section 26 of the Indian Stamp Act, 1899, and not merely on the basis of dead rent. Dead rent constitutes only the minimum guaranteed payment under the lease, whereas anticipated royalty reflects the estimated economic value of the mining rights and is the statutory yardstick for determining stamp duty. 2026 INSC 738.