# Stamp Duty Self-Assessment (STSDS) in Malaysia

> How the phased stamp duty self-assessment system works, which instruments each phase covers, and how assessment risk moved from LHDN to the person stamping the document.

- Category: taxation
- Language: en
- Status: published
- Updated: 2026-07-20
- Canonical: https://negaraku.md/en/taxation/stamp-duty-self-assessment

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Most stamp duty guidance still in circulation describes a system where you send
the document to LHDN, the Collector works out the duty, and you pay what the
notice says. For a large and growing share of instruments, that model ended on
1 January 2026 — and with it, the comfortable position that the amount on the
notice was somebody else's problem.

## What actually changed

Under the old model, stamping ran through **formal assessment**: the duty payer
submitted the instrument, LHDN processed it, and a notice of assessment came
back with a figure. The Collector determined the duty.

Under **STSDS**, the duty payer completes the stamp duty return — the **BNDS**,
*Borang Nyata Duti Setem* — assesses the duty themselves, and pays. LHDN's
operational guidelines put it plainly: the assessment is deemed to have been
raised on the day the BNDS is submitted, and payment follows without waiting for
a notice.

The verification does not disappear. It moves to the back end, as audit.

## The three phases

| Phase | Effective | Instruments covered |
| --- | --- | --- |
| **Phase 1** | **1 January 2026** | Leases and tenancies, securities instruments, general stamping |
| **Phase 2** | **1 January 2027** | Transfers of real property **not involving a JPPH valuation** |
| **Phase 3** | **1 January 2028** | All instrument categories outside Phases 1 and 2 |

The critical operational point, stated expressly in the guidelines: instruments
falling in Phases 2 and 3 **retain formal assessment** until STSDS is fully
implemented for them. Between now and 2028 both systems run in parallel, and
which one applies depends on the instrument in your hand.

Note also what Phase 2 excludes. Transfers of real property that **do** require a
valuation by JPPH, the Valuation and Property Services Department, are not in
Phase 2 — they fall through to Phase 3. The dividing line is whether an
independent valuation is needed, not whether the instrument is a property
transfer.

## What is in Phase 1

Phase 1 sounds narrow and is not. LHDN's guidelines list three BNDS categories,
all submitted on form **PDS 15**, with worked examples:

**Securities instruments** — undertakings or agreements to pay, and assignments
or transfers of rights. Examples given include service agreements, licence
agreements, equipment rental agreements, annuity payment agreements, kiosk and
vending machine space agreements, transfers of membership agreements, transfers
of intellectual property and trademark agreements, and absolute assignments of
insurance policies.

**Leases and tenancies** — documents, agreements or novations relating to the
rental or lease of immovable property such as houses, offices, factories, shop
lots and vacant land. Examples include house lease agreements, land agreements,
tenancy agreements, novations of tenancy agreements and Form KTN 15A.

**General stamping** — all general instruments other than transfers, securities
or leases, typically agreements or declarations without consideration. Examples
include statutory declarations, house sale and purchase agreements, **employment
offer letters**, company constitutions, insurance policies and immigration bonds.
The sale and purchase agreement here is the *contract* — a general-stamping
instrument in Phase 1. It is not the instrument of transfer (the memorandum or
deed that actually conveys the property and carries the ad valorem duty); that
conveyance is the "transfer of real property" that waits for Phase 2, or Phase 3
where a JPPH valuation is needed.

That third category is where most businesses are now exposed without realising
it. Employment contracts and company constitutions are ordinary corporate
paperwork, and both are squarely inside Phase 1 from 1 January 2026.

## The two payment clocks

This is the detail that costs money, because the numbers are close enough to
look interchangeable and are not.

| | **STSDS** | **Formal assessment** |
| --- | --- | --- |
| Payment due | **30 days** from the deemed assessment date, being the date the BNDS is submitted | **14 days** from the date the notice of assessment is issued, or the period set by the Collector |
| Statutory basis | s.36(2) Stamp Act 1949 | s.40 Stamp Act 1949 |

A firm that has run a 14-day internal diary for years will now be early on
Phase 1 instruments and — far worse — may apply the 30-day habit to a Phase 2
transfer that still runs on 14 days.

## What has not changed

Three things stayed exactly where they were, and assuming otherwise is a common
error.

**The stamping deadline.** Section 47 still requires presentation within **30
days of execution** in Malaysia, or 30 days after the instrument is first
received in Malaysia if executed abroad. Self-assessment does not buy time.

**The late stamping penalty.** Section 47A applies **RM50 or 10%** of the
deficient duty, whichever is greater, where stamping happens within three months
after the deadline, and **RM100 or 20%** thereafter. This two-tier structure took
effect on 1 January 2025 and replaced the older three-tier scale that began at
RM25 or 5% — most published guidance still prints the superseded version.

**The duty itself.** STSDS changes who computes the duty, not how much it is.
The First Schedule rates are untouched.

And one new obligation worth diarising: duty payers must **retain the instrument
and all related records for seven years** from the date the duty was paid.

## "Securities" does not mean shares

The single most costly misreading of Phase 1. *Sekuriti* in the STSDS scope means
**security and undertaking instruments** — agreements to pay or repay, and
assignments or transfers of property. LHDN's operational guidelines define the
securities return as covering transfers, assignments and novations of property
**other than real property, shares and businesses**.

Share transfers are expressly listed among the instruments that remain on
**formal assessment**, alongside transfers of real property and transfers of
business. They fall into **Phase 3 in 2028**.

Three practical consequences for share transfers today: you still wait for a
notice of assessment, payment runs on the **14-day** s.40 clock rather than 30
days, and the 2026 penalty remission programme — which applies only to
self-assessed Phase 1 instruments — does not reach them.

## The statutory machinery behind it

STSDS is not an administrative rearrangement. Three 2024 statutes rebuilt the
assessment provisions of the Stamp Act, and the key sections commenced on
**1 January 2026**:

- **s.35A** (Act 863) requires the person to furnish a **return in the prescribed
  form together with the instrument**, by electronic medium.
- **s.36** (as amended) provides that where a return is furnished under s.35A,
  **the Collector is deemed to have made an assessment** and the return is deemed
  to be an assessment. This is the actual mechanism that replaced adjudication.
- **s.35B** requires the instrument and all relevant documents to be kept for
  **seven years** from the date the duty is paid.
- **s.36CA** (Act 862) sets the **time bar**: the Collector may raise an
  assessment or additional assessment **within five years** after the date the
  duty was paid or would have been paid — and **at any time** where it appears
  that fraud or wilful default has been committed, **or that a person has been
  negligent**.

The penalty provisions arrived with them. Under **s.72C**, failing to furnish a
return is an offence with a fine up to RM10,000, or a Collector-imposed penalty
of RM200 to RM2,000 where there is no prosecution. Under **s.72D**, an
**incorrect return** carries a fine of RM1,000 to RM10,000 plus a special penalty
**equal to the duty undercharged** — or, absent prosecution, a Collector penalty
equal to the undercharged duty.

That s.36CA negligence limb deserves attention. It mirrors s.91(3) of the Income
Tax Act, and it means a self-assessed instrument stamped carelessly has **no
limitation period at all**.

## Where the risk actually moved

The shift is easy to state and easy to underestimate. Under adjudication, a
taxpayer who disclosed the instrument and paid the assessed figure had
substantially discharged the risk. Under self-assessment, the taxpayer owns the
characterisation of the instrument, the choice of First Schedule item, and the
computation — and each of those is now auditable.

LHDN has been building the back end for this since before Phase 1 started. Its
6 June 2025 media release records that a **Stamp Duty Audit Framework** was
issued on **1 January 2025**, and that stamp duty audit activity had begun
nationwide. The employment contract enforcement wave that followed was a direct
product of that framework: audits found large volumes of unstamped employment
contracts, which is precisely the kind of finding a self-assessment regime is
designed to surface.

Expect the same pattern in other instrument categories as Phases 2 and 3 land.

## Common mistakes

- **Describing stamping as adjudication.** For Phase 1 instruments there is no
  separate adjudication step; the return raises the assessment.
- **Applying the 30-day payment rule to a Phase 2 or 3 instrument.** Those still
  run on 14 days from the notice under s.40.
- **Assuming Phase 1 is only about tenancies.** General stamping sweeps in
  employment contracts, company constitutions and insurance policies.
- **Reading "securities" as shares.** Share transfers stay on formal assessment
  until Phase 3 in 2028.
- **Assuming all property transfers move in Phase 2.** Only those not requiring
  a JPPH valuation; the rest wait for Phase 3.
- **Quoting the old RM25 or 5% first penalty band.** It was replaced on
  1 January 2025.
- **Treating self-assessment as lower risk because no notice arrives.** The
  absence of a notice is the transfer of risk, not the removal of it.

## What's next

Inventory the instruments your business executes routinely and sort them by
phase. Anything in leases, securities or general stamping is live now and should
already be running through the BNDS with a 30-day payment diary. Anything that is
a property transfer needs a decision on whether a JPPH valuation is required,
because that determines whether it moves in 2027 or 2028.

Then check the backlog. If stamp duty audits are already running against the
framework issued in January 2025, unstamped historical documents are a known
finding rather than an obscure one — and the penalty scale for late stamping
starts at RM50 or 10% and doubles after three months.

## Sources

- Garis Panduan Operasi — Permohonan Penyeteman Melalui Sistem Taksir Sendiri Duti Setem — https://www.hasil.gov.my/wp-content/uploads/20251226-garis-panduan-operasi-permohonan-penyeteman-melalui-sistem-taksir-sendiri-duti-setem.pdf (LHDN)
- Sistem Taksir Sendiri Duti Setem (STSDS) — https://www.hasil.gov.my/en/stamp-duty/sistem-taksir-sendiri-duti-setem-stsds/ (LHDN)
- Stamp Act 1949 (Act 378), text as at 1 January 2024 — https://lom.agc.gov.my/act-detail.php?act=378 (Attorney General's Chambers)
- Media Release HASiL/2025/06/06 — 50, Stamp Duty Exemption for Employment Contracts — https://www.hasil.gov.my/wp-content/uploads/20250606_kenyataan-media-hasil_pengecualian-pengenaan-ds-untuk-kontrak-penggajian-yang-dimuktamadkan-sebelum-1-januari-2025.pdf (LHDN)
- Finance Act 2024 (Act 862) — new ss.36CA and 36CB, amendment of s.47A — https://lom.agc.gov.my/ilims/upload/portal/akta/outputaktap/2592589_BI/Act%20862%20-FINANCE%20ACT%202024.pdf (Attorney General's Chambers)
- Measures for the Collection, Administration and Enforcement of Tax Act 2024 (Act 863) — new ss.35A, 35B, 72B–72D — https://lom.agc.gov.my/ilims/upload/portal/akta/outputaktap/2592590_BI/Act%20863.pdf (Attorney General's Chambers)

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