Real Estate Stamp Duty is a type of tax collected
by the Government of India. The British Government introduced
Stamp Duty in India by enacting the Indian
Stamp Act, 1899. Stamp Duty is paid for the transaction performed
by way of document or instrument under the provisions of Bombay
Stamp Act, 1958 and Indian Stamp Act, 1899 to the Collector
of Stamps. The proceeds of the Duty go to the State in which
they are levied.
Stamp Duty is payable when any property or other contractual transaction is entered into, in India or even abroad. It is levied on documents or instruments of transactions while buying and selling property. However, the subject matter of the transaction must be situated in India.
Penalty
Stamp Duty is expected to be paid in full and on time. Penalty involves fine or even imprisonment. Delay in payment of property Stamp Duty will draw a penalty at the rate of 2% per month on the deficit amount of the Stamp Duty and a maximum penalty of 200% of the deficit amount of the Stamp Duty.
Appeal
In so far as the orders of the Collector are concerned, an appeal lies to the Sub-Court having jurisdiction over the area within two months. However, the appeal shall be filed only after the entire amount of the deficit duty as determined by the Collector has been deposited.
However, Stamp Duty is not payable on the following:
- Documents, executed on behalf of the Government;
- Testamentary documents;
- Documents, required to be made for judicial or non-judicial proceedings;
- Documents, filed in judicial or non-judicial proceedings.
Importance of Stamp Duty
All documents chargeable with duty and executed in India shall be stamped. Stamp Duty paid instrument / document is considered a legal instrument / document and admitted as evidence in courts. The instruments/ documents without the requisite Stamp Duty are not admitted as evidence by the court. It is liable to be seized by any Public Officer or Court before whom it is produced or whenever it comes before them in the course of discharge of their duties.
When a nominee transfers the flat subsequently in the name of legal heirs, that transfer instrument is required to be stamped as per the market value. Market value of any property is determined by the Stamp Duty authorities at Stamp Duty office of the area where the property is located. However, where value is decided by the Government or Quasi-Government bodies, then that becomes the valid market value for the purpose of Stamp
It is important to know that Stamp Duty is payable on instruments and not on transactions. Stamp Duty will be charged on the basis of the contents of the instrument only. In case any information required for working out Stamp Duty is missing in the instrument and comes to the notice of the Valuation Officer who can then call for it. If such information as the area of the flat, number of the floors and year of construction is mentioned in the Agreement, the matter can be expedited and lead to speedy and quicker
Purchase of the Stamp Paper
There are two categories of stamps available viz. Judicial stamps and Non-Judicial Stamps. The document which is chargeable with Stamp Duty should be prepared on the Non-Judicial Stamp Paper of appropriate value.
From 01/05/1994, Stamp Paper are to be purchased in the name of one of the parties to the instrument/ document, otherwise it will be as if no stamp paper was used. However, it can be enforced in law if proper stamp duty is paid subsequently. Also, stamp paper is valid for a period of six months from the date of purchase exceeding which it will be treated as ordinary paper.
Who is liable to pay Stamp Duty?
The stamps are required to be purchased in the name of one of executors to the instrument. Stamp Duty is payable before execution of the document or on the day of execution of document or on the next working day of executing such a document. Execution implies putting signature on the instrument by the person's party to the document.
If the stamp paper is not in the name of the parties and is
being used for preparing the agreement, it will not make the
agreement invalid and can be enforced in law if proper Stamp
Duty on property is paid subsequently.
As per Section 30 of Bombay Stamp Act, 1958, in the absence of any agreement to the contrary, the purchaser/transferee has to pay Stamp Duty as provided with respect to certain kinds of documents like Sale Deed, Mortgage Deed, and others. The following table depicts the parties who are liable to pay stamp duty according to the instrument:
S.No |
Document / Instrument |
Payer |
1 |
Mortgage Deed |
Executor (Purchaser) |
2 |
Release |
Executor (Purchaser) |
3 |
Conveyance |
Grantee |
4 |
Lease |
Lessee |
5 |
Exchange |
Equally shared between parties |
6 |
Partition |
Proportional to respective shares |
7 |
Sale Deed |
Purchaser |
8 |
Security Bond |
Purchaser |
9 |
Settlement Bond |
Purchaser |
Related Acts