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A rent agreement is a legal document that acts as a contract between the tenant and landlord of a particular property. The agreement exists for a select period of time and contains pre-discussed conditions which must be followed by the tenant. The agreement gives the tenant a temporary right of possession of the said property till its renewal. The norms specified in the agreement can be changed by discussing with the landlord.
Unless this agreement is registered, it does not stand legal so to register a rent agreement, the tenant has to pay registry charges and stamp duty. Nevertheless, this payable amount varies from city to city and is paid by purchasing the rent agreement stamp paper that you owe to the government.
However, is it necessary? If yes, what is the value of the rent agreement stamp paper? Given the onset situation, is it possible to apply online and does it have the same value as the physical paper?
Let’s find out answers to these stamp duty and rental agreement questions from the article below, shall we?
Stamp duty of the property is the contract made legally under Section 3 of the Indian Stamp Act, 1899. Therefore, it is important to pay the stamp duty as it is the charge levied on different property transactions that the government charges.
This payment of the lease is to be made as soon as you buy a property and also when you choose to go in for a rental agreement.
The stamp duty of a particular property’s rent agreement is the contract made legal under the Indian Stamp Act of 1899, Section 3. Therefore, it is important to pay stamp duty as it is the charge the government levies on different property transactions. This payment of the lease is to be made as soon as you buy a property and also when you choose to go in for a rental agreement.
This agreement was made at __________ (city, state) on this __________ (date, month, year) between __________ (name of the landlord), residing at __________ (landlord’s residential full address) hereinafter referred to as the ‘LESSOR” of the one part and __________ (name of the tenant), residing at __________ (tenant’s full address) hereinafter referred to as the ‘LESSEE’ of the other part.
The terms LESSEE/TENANT and LESSOR/OWNER shall mean and include their respective legal heirs, representatives, assigns, successors, etc. while the LESSOR/OWNER is the owner and possessor of property number ________ (address of the property, falling in the category __________ (residential property/farm house/apartment/independent house) and has agreed to let out __________ room, ________ toilet, and __________ bathroom set on the said property with an extent of __________ square feet to the LESSEE/TENANT who has agreed to pay Rs.__________/- per month (in words) for the same.
Now, this rent agreement is witnessed as under
In witness whereof the LESSEE/TENANT and the LESSOR/OWNER have hereunto subscribed their hand at __________ (place) on __________ (date, month, and year), in presence of the following witnesses:
__________ (name of the LESSOR/OWNER)
__________ (name of the LESSEE/TENANT)
This is a tabular representation of the stamp duty charges as per the different states in India:
AREA | AGREEMENT PERIOD | AMOUNT |
Delhi | Up to 5 years | 2% |
Noida | Up to 11 months | 2% |
Karnataka | Up to 11 months | 1% of the total rent + annual deposit paid, or Rs 500 (whatever is lower) |
Tamil Nadu | Up to 11 months | 4% of rent + deposit money |
Uttar Pradesh | Less than a year | 4% of the annual deposit + deposit |
Maharashtra | Up to 60 months | 0.25% of the total rent |
Gurgaon | Up to 5 years | 1.5% of the average annual rent |
Gurgaon | 5-10 years | 3% of annual average rent |
Certain factors decide the value of stamp duty such as
The value of the rent agreement stamp paper is based on if it’s a short-term or a long-term lease and differs from state to state. Therefore, it’s best to research the stamp duty rate of your residing state. Besides these, the annual rent is also an important factor, especially when it comes to commercial rental agreements.
In a broader sense, a month-on-month stay could be written on the stamp paper too without any registration. However, the rent agreement stamp duty is more than that since it is required for both, short-term to long-term stays
In simple words, a rental agreement in real estate can only be given in the retrospective effect, within the terms of the agreement. This means, there is no way for the stamp duty charges to be backdated.
Purchasing stamp paper is the duty of the landlord or the tenant and whoever chooses to do so would continue to be the purchaser. That means, if the landlord or the tenant wishes to own the originals, they must buy the stamp paper themselves, otherwise, they can keep the photocopy or the scanned version from the other party.
The registration of a rent agreement is the creation of legal proof of the tenancy and leasing of the property in question. Here are the advantages that registration provides:
There are online sites that have now launched virtual rental agreement facilities. By applying online, the physical presence of the tenant or the landlord is not needed to complete the rental agreement process.
All that’s needed is to:
Speaking of its relevance, e-stamping is surely valid in certain states, therefore, it’s best to check before moving forward. Simply log on to the Stock Holding Corporation of India Ltd (SHCIL) website and figure out if your state offers e-stamping.
1) Documents that the landlord needs to present for registration –
2) Documents that the Tenant needs to present for registration –
If representing another person for the registration – The power of Attorney should be presented
A rent agreement on stamp paper comes in handy when you interact with HRA claims, banks, school applications, vehicle purchases, gas distribution, telephone connections, etc. They ask for the rent agreement with stamp duty as your proof of address.
Stamp papers can be used for 6 months after purchase. If you have unused ones, they must be given back to the collector within 6 months expiry date for a refund. Using stamp papers older than 6 months after purchase is not legal.
If you have a rent agreement for less than a year, you will be required to provide stamp duty. But no registration. Rent agreements drawn up for a year or more needs to be registered without stamp duty.