Instruments on which Stamp Duty is paid includes every document by which any right or liability is or purports to be created, transferred, limited, extended, extinguished or recorded but would not include a bill of exchange, cheque, promissory note, bill of lading, letter of credit, policy of insurance, transfer of shares, debentures proxy and receipt (which is charged under India Stamp Act).
Stamp Duty for property is payable on all instruments/ documents relating to the transfer of immovable property including:
- Sale Agreement
- Conveyance Deed
- Gift Deed
- Mortgage Deed
- Exchange Deed
- Deed of Partition
- Power of Attorney
- Leave and License Agreement
- Agreement of Tenancy
- Lease Deed
- Transfer of Lease
These have to be properly stamped before Registration. The only exception is Transfer by Will (or by original nomination in a Cooperative Housing Society)..
From 04-07-1980 onwards, if the property is not covered under the Co-operative Society Act, one is required to pay stamp duty on market value, at the time of execution of the document. For any flat purchased in a Co-operative housing society on or after 10-12-1985, stamp duty will be paid on market value as per the Ready Reckoner at the time of signing the agreement itself. Market value is the price which the property commands in the open market on the date of execution of such instrument.
Stamp Duty Rates
Every State has its own Stamp Act, for instance, the transactions
in Maharashtra related to Stamp Duty, are governed by the Bombay
Stamp Act, 1958. Hence rates of Stamp Duty vary with each State.
For instance, the stamp duty rates for consideration more than
Rs.1,000 in Goa is 8%, inHaryana is 12.5% and in Himachal Pradesh
is 8%, while in Kerala it is 8.5% of the value of consideration,
and in Madhya Pradesh it is 7.5% of market value. In some States
like Andhra Pradesh, concessional rates of Stamp Duty have been
prescribed for the Sale Deeds of Apartments.
A Comparative Study
In Australia, stamp duty rates on instruments are quite low and on some have been exempted. In the UK, there is no attempt to evade the duty by under-valuation. the British stamp law accommodates frequent changes in the structure of Duties and there is a constant efforts at rationalization in response to public demand and market forces.
In India, however, some States levy very high rates of Stamp Duty which can be a serious deterrent to property deals. It not only discourages the smooth functioning of the property market as it reduces the volume of transaction, but obstructs the transfer of property to more productive uses as well , thus diminishing the efficiency of resource allocation. Under the Jawaharlal Nehru National Urban Renewal Mission scheme, though, one of the mandatory reforms is to gradually reduce the stamp duty to 5% in order to increase the flow of property transactions in the market.
Stamp duty rates on legal documents
In Real Estate Law, there are two types of Agreements to sell
immovable property. The first case is when possession of the
property is delivered to the purchaser. In the second case,
the agreement is just a simple agreement with no intention of
delivery of the possession of the property whatsoever.
When possession of the property is given through an
'Agreement to Sell', the Stamp Duty applicable is 8%
if the property is situated in any Municipal Corporation, 7%
if it falls under any special grade or selection grade Municipality,
and 6% for other areas. The Duty is calculated on the market
value of property. The second case is of Agreement to Sell,
under which possession of the property is not effected, Stamp
Duty payable is a uniform rate of 5% of the market value of
the property.
A General Power Of Attorney authorizing the
Agent to construct or develop or sell any immovable property
will attract a Stamp Duty at the rate of 5% on the market value
of the property, even if it is given to a family member.