Sale and lease deeds have to be stamped

Non-pay­ment of stamp duty can lead to im­pound­ing of the le­gal doc­u­ment and at­tract a hefty penalty

HT Estates - - HTESTATES - Sunil Tyagi

The In­dian Stamp Act, 1899, cod­i­fies and gov­erns the law re­lat­ing to pay­ment of stamp duty in In­dia. Stamp duty is a kind of tax payable on trans­ac­tions of both mov­able and im­mov­able property. In trans­ac­tions per­tain­ing to im­mov­able property, stamp duty is usu­ally cal­cu­lated on the ba­sis of the mar­ket value of the property (as per preva­lent cir­cle rates) or on the ba­sis of the con­sid­er­a­tion amount of the property set out in the doc­u­ment, whichever amount is higher. Some im­por­tant in­stru­ments per­tain­ing to im­mov­able property that must be com­pul­so­rily stamped are agree­ment to sell, sale deed, lease deed, gift deed, ex­change deed, and par­ti­tion deed, to name a few.

Sev­eral States like Ut­tar Pradesh, Ra­jasthan, Ker­ala, Kar­nataka and Ma­ha­rash­tra have en­acted sep­a­rate stamp acts and rules. In such states, pay­ment of stamp duty is gov­erned by their re­spec­tive state stamp acts and rules. Hence, rates of stamp duty levied on a par­tic­u­lar in­stru­ment may dif­fer from state to state, as may be pre­scribed un­der the rel­e­vant stamp duty sched­ule of that state un­der the In­dian Stamp Act, 1899, or un­der the sep­a­rate stamp act.

When to pay?

Stamp duty i s re­quired t o be paid ei­ther be­fore ex­e­cu­tion of the doc­u­ment or on ex­e­cu­tion of the doc­u­ment. Ac­cord­ingly, one must en­sure full and req­ui­site stamp duty has been paid be­fore pro­ceed­ing to ex­e­cute the documents. As per the pro­vi­sions of the In­dian Stamp Act, 1899, i n a sale deed, it is the buyer’s li­a­bil­ity to pay stamp duty on sale trans­ac­tions, un­less the par­ties mu­tu­ally agree other­wise. Sim­i­larly, in case of lease deed, it is lessee’s re­spon­si­bil­ity to pay stamp duty on lease trans­ac­tion, un­less the par­ties to lease trans­ac­tion mu­tu­ally agree other­wise.

Why pay?

Timely pay­ment of full stamp duty and sub­se­quent regis­tra- tion, wher­ever re­quired, en­ables a doc­u­ment to be ad­mis­si­ble in ev­i­dence in courts. Sec­tion 35 of the In­dian Stamp Act, 1899, im­poses a bar as to the ad­mis­sion of an un­stamped in­stru­ment in ev­i­dence. In case a dis­pute arises, a le­gal doc­u­ment that is not duly stamped would only be­come ad­mis­si­ble in ev­i­dence in courts af­ter req­ui­site stamp duty and penalty has been fully paid.

Hence, one must bear in mind that the con­se­quences of non­pay­ment or de­fi­cient pay­ment of stamp duty are harsh — it can lead to im­pound­ing of the doc­u­ment as well as at­tract a hefty penalty of up to ten times of the ap­pli­ca­ble stamp duty.

Of­ten, people er­ro­neously as­sume that if a par­tic­u­lar doc­u­ment does not re­quire com­pul­sory reg­is­tra­tion, then such doc­u­ment does not re­quire to be com­pul­so­rily stamped ei­ther. How­ever, there are cer­tain documents (for in­stance, a lease deed of term less than a year) which are re­quired to be com­pul­so­rily stamped even though they may not re­quire com­pul­sory reg­is­tra­tion.

How to pay?

In Delhi, Gu­jarat, Kar­nataka, Ma­ha­rash­tra, As­sam, Tamil Nadu, Ra­jasthan, Hi­machal P r a d e s h , t o n a m e a f e w, e- stamp­ing fa­cil­ity has been in­tro­duced.

Ear­lier, e-stamp­ing in Delhi was com­pul­sory only for trans­ac­tions where stamp duty was more than ₹ 500. In Delhi, the use of e-stamp pa­pers has now be­come manda­tory for stamp duty of all de­nom­i­na­tions.

As e- stamp­ing is done by se­cured elec­tronic pay­ment chan­nels, fraud­u­lent trans­ac­tions and hoard­ing of stamp pa­pers would be greatly cur­tailed.

THINKSTOCK

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