On 21 January 2026, the Government of the Punjab, Pakistan, issued a notification remitting stamp duty on mergers approved under the Companies Act, 2017, thereby supporting lawful corporate restructuring and resolving the long-standing provincial inconsistency.
Background:
This notification emerges directly from the ongoing litigation surrounding the Jadeed Feeds Industries (Pvt.) Ltd. vs. Board of Revenue, Punjab (2025 CLD 587), where companies challenged the Punjab government’s practice of imposing stamp duty on asset transfers occurring through court- or SECP-sanctioned mergers. The petitioners argued that Section 282(5) of the Companies Act, 2017, a federal statute, explicitly provides that no stamp duty is payable on such transfers.
The Lahore High Court, while hearing the intra-court appeal, questioned the legal basis for Punjab continuing to impose such duty and highlighted that federal law overrides provincial law in case of conflict.
The Court’s scrutiny placed the provincial government under pressure to correct the inconsistency, leading to the issuance of this notification to formally remove stamp duty on mergers approved under the Companies Act, 2017.
Key Points:
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Section 9 of the Stamp Act, 1899 empowers the provincial government to reduce, remit, or exempt stamp duty on specified instruments.
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The notification expressly remits stamp duty (fully or partially) on instruments that relate to mergers, schemes of arrangement, or amalgamations carried out under:
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Companies Act, 2017, and
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In some cases, through orders of the Court under the same Companies Act, 2017.
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The objective is to ensure that merger-related transfers occurring by operation of law do not attract stamp duty, as they differ fundamentally from commercial sales or negotiated conveyances.
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The exemption covers:
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SECP Sanctioned Mergers
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Transfers executed through a scheme of merger, amalgamation, or arrangement sanctioned by the Securities and Exchange Commission of Pakistan (SECP) under Sections 279 to 282 of the Companies Act, 2017.
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These transfers, whether of property, undertakings, or business, will not require stamp duty.
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Court Sanctioned Mergers
When a merger is sanctioned through a Court order under Section 285(2) of the Companies Act, the transfer of assets arising due to that sanctioned scheme will also be exempt from stamp duty.
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Transfers by Operation of Law
The notification emphasizes that the exemption applies to transfers that occur:
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Automatically,
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Through operation of law, and
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Not through a signed commercial instrument between parties.
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Mergers will be treated as statutory processes rather than voluntary property sales, which is why such transfers are distinguished from ordinary conveyances.
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The exemption is available only where the merger scheme has been formally sanctioned by SECP or the Court under the Companies Act.
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It does not apply to:
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Commercial property sales
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Transfers arising from private agreements
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Transactions not falling under the Companies Act
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The exemption is valid only when the merger is lawful, properly approved, and carried out under the statutory framework.
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The notification ensures that the exemption benefits legitimate corporate restructuring rather than being used to avoid taxes on regular transactions.
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By issuing the exemption under Section 9, the notification provides firm legal backing and removes the ambiguity that previously existed under Section 27-A regarding “conveyances” in the context of mergers.