Under the State Stamp Act, any agreement ( not void) is chargeable with duty. The stamp duty is a state subject and therefore differ from state to state. Any contract /agreement between two entities [for legal purpose ] requires in writing and liable to be charged with stamp duty as an agreement. If such unstamped agreement is preduced before the court as an evidance, it will not be admissible. Howvere, it can be made admissible after payment of penalty [ 10 tims] with the permission of court. The practioce of avoiding stamping of agreement / contract can not bye-pass the legal requirement.  

The contract on letter head only represents that the contract is by a particular entity. It does not full fill the legal requirement of stamping. 

regards

when some one enters into any agreement,one is duty bound to see what is the place of agreement and what duty is payable on it,and such duty should be made payable on it forthwith,that is by buying the stamp same day and affixing it with the agreement by its cancellation,no matter on what head,aletter head or a plain paper head it has been drawn,if there is failure to do so,and matter comes to light,in any way before any authority,it shall impound it and ask to pay10times penality thereon.

@Mr. Prabhakar singh.

How do we know the duty payable for different agreements.

Stamp duty is a revenue that goes to states. The power to legislate over the matter is then in Concurrent List.

There is an enactement known by name stamp duty Act. Almost every State has amended it.It provides what duty is payable in state on which agreement.

In cases of confusion one should seek preadjudication by collector of district what duty,if any ,is payable on a drft agreement.