All About Stamp Duty in India

The main reasons for paying the stamp duty are mentioned below:

1. Shows that the document is legally valid.

1. Can be provided in court.

1. Source of revenue for governments.

Stamp Duty Act

Stamp duty is paid as per the provisions of Section 3 of the Indian Stamp Act, 1899. Stamp duty is levied to boost revenue for local governments besides lending legality to a document.

Stamp Duty Payment

It is important to note that stamp duty should be paid in full and without any delay, failing which, a penalty is levied. A stamp duty document is a legal instrument that has evidentiary value (admissible in a court of law as evidence).

Stamp duty has to be paid before execution (signature by an individual’s party) of a given document, the next day, or on the day of document execution. Stamp duty is paid by a buyer in most cases.

However, both the seller and the buyer have to bear the burden of stamp duty for property exchange cases. As per Section 13 of the Indian Stamp Act, 1899, an individual executing a given instrument has to cancel the stamp (adhesive) by writing his initials or name across it.

If a stamp is not canceled in the aforementioned method, the document is considered unstamped. In other words, the stamp should be visible on the face of an instrument and cannot be applied to another instrument.

Stamp Duty Charges

Stamp duty rates differ in various states across the country as stamp duty in India, is a state subject. However, the central government fixes the stamp duty rates of specific instruments.

As mentioned above, a delay in the payment of stamp duty will attract a penalty of 2% every month (up to 200% of the remaining amount).

Stamp Duty on Property Registration

Legal evidence of ownership or transfer of a property is required. In the end, the buyer, in most cases, has to register his or her name in the municipal records. The buyer has to pay stamp duty at the time of registration.

The amount of stamp duty may vary from one state to another. Stamp duty also depends on whether a given property is new or old.

Stamp Duty Registration Factors

The factors that are considered when determining the stamp duty charges are given below:

1. Age of the Property
2. Value of the Property
3. City or location of the Property
4. Gender and age of the Property owner
5. Usage of Property

What are the Transactions where Stamp Duty needs to be Paid?

Given below are some of the transactions where Stamp Duty needs to be paid:

1. Promissory notes.

1. Mortgage deeds.

1. Loan agreements.

1. Legal documents such as memoranda of understanding, partnership deeds, power of attorney, and affidavits.

1. Lease and rental agreements for industrial, commercial, and residential properties.

1. Transfer or sale of buildings and land.

Documents which Require for Stamp Duty

Some of the documents which require stamp duty are listed below:

1. Transfer instruments

1. Deed of partition

1. Reconveyance of mortgaged property

1. Mortgage deed

1. Certificates of sale

1. Gift deed

1. Exchange deed

1. Tenancy agreement

1. Power of attorneys

1. License agreement

1. Lease deeds

Different Ways to Pay Registration Charges and Stamp Duty

Some of the various ways to pay the registration charges and stamp duty are mentioned below:

1. E-Stamping: Can be completed online on the official website of Stock Holding Corporation of India (SHCIL).

1. Franking: The property documents are stamped by an authorised franking agent.

1. Physical Stamp Paper: Stamp papers can be purchased to complete the transaction.

Stamp Duty Rates in Indian States

Stamp duty rates in various states are listed in the table below:

Stamp Duty Calculator

Stamp duty calculators can be used to find the stamp duty applicable on a given property in any state across the country by entering various details such as property value and the name of a state.

Stamp Duty Calculation

You should be aware of the fact that stamp duty charges on property registration vary from state to state. There are multiple parameters used by the authorities to calculate charges such as involving the type of building or plot involved.

For example, some states consider the constructed area for calculating stamp duty and registration charges for independent houses while a figure is arrived at based on the built-up area in the case of apartments. The stamp duty can also be revised by states annually as per the state budget. In some states, women get a concession on both stamp duty and registration charges.

Here are some of the factors that you must keep in mind on the implication of stamp duty at the time of property registration.

1. The calculation is primarily done based on the "Guidance Value" of the property, the minimum value at which the property should be registered. The value is decided by the competent authority under the state government.
2. The charges are indirectly proportional to the market value of the property and other aspects such as market performance.
3. The location of the property such as urban or rural areas also has a say in deciding the stamp duty payable.
4. Other levies such as state and central taxes are also applicable on registration and stamp duty charges.