Only the person who erases the mark can be punished.

The law also punishes anyone who knowingly keeps, sells, or passes on a stamp with the erased mark, or a stamp they know has already been used — even if they didn't erase it themselves.

This only applies to postage stamps.

It applies to any stamp issued by the government for revenue purposes, such as stamps used for legal documents and stamp duty, not just postal stamps.

Bharatiya Nyaya Sanhita, 2023

Section 185

Erasure of mark denoting that stamp has been used

Whoever, fraudulently or with intent to cause loss to Government, erases or removes from a stamp issued by Government for the purpose of revenue, any mark, put or impressed upon such stamp for the purpose of denoting that the same has been used, or knowingly has in his possession or sells or disposes of any such stamp from which such mark has been erased or removed, or sells or disposes of any such stamp which he knows to have been used, shall be punished with imprisonment of either description for a term which may extend to three years, or with fine, or with both.§

Why this exists

Government revenue stamps (used on documents, legal papers, etc.) are marked or cancelled once used, so they can't be reused to avoid paying duty again. This provision, carried over from Section 262 of the old Indian Penal Code, protects government revenue by criminalizing tricks to make a used stamp look fresh and reusable, which would let people dodge stamp duty and cheat the exchequer.

Common misconceptions

Myth: Only the person who erases the mark can be punished.
Fact: The law also punishes anyone who knowingly keeps, sells, or passes on a stamp with the erased mark, or a stamp they know has already been used — even if they didn't erase it themselves.
Myth: This only applies to postage stamps.
Fact: It applies to any stamp issued by the government for revenue purposes, such as stamps used for legal documents and stamp duty, not just postal stamps.