Everything You Need To Know About Stamp Duty On Rental Agreement

Stamp Duty On Rental Agreement

Stamp Duty On Rental Agreement, the landlord is expected to make a payment. 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?

First Things First, Is Paying a Rent Agreement Stamp Duty Necessary?

First Things First, Is Paying a Rent Agreement Stamp Duty Necessary

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.

Rent Agreement Stamp Paper As Per The Different Indian states!

Rent Agreement Stamp Paper As Per The Different Indian states

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

What is the Value of the Stamp Duty? And, Is it Applicable on the Month-on-Month Rental Stay ?

Everything You Need To Know About Stamp Duty On Rental Agreement 1

The crucial factors that determine the value of the stamp duty are the premises, location, and the duration of the agreement of the property. Adding on, the value of the rent agreement stamp paper based on if it’s short-term or long-term leases is again different from state to state, therefore, it’s best to know the rate of the state you reside in to be aware of its value. Besides these, the annual rent also plays a crucial role, especially in commercial rental agreements.

Does it link to the month-on-month rental stay of the tenant ?

Everything You Need To Know About Stamp Duty On Rental Agreement 2

In a broader sense, a month-on-month stay could be written on the stamp paper that 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.

What is the Stamp Duty of a Backdated Rental Agreement in Real Estate ?

Everything You Need To Know About Stamp Duty On Rental Agreement 3

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.

Who Must Buy A Rent Agreement Stamp Paper ?

Purchasing a stamp paper of the duty of the landlord or the tenant and they 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, you can keep the photocopy or the scanned version from the other party.

Stamp Duty And Registration: The Significance

Stamp Duty And Registration The Significance

The registration agreement is the method where the document’s contents are registered with an official. Here are the advantages that registration provides–

  • Prevents frauds and/or forgeries
  • It acts as proof that the document was prepared by the parties mentioned in the deed
  • Offers transparency and clarity
  • Reveals the feuds, liabilities, and debts in the property’s name

Stamp Duty And Registration: How to Apply Online? And, is e-Stamping Valid ?

Stamp Duty And Registration. How to Apply Online And, is e-Stamping Valid

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:

  • Fill out the details
  • Sign the agreement, digitally
  • Get the rental agreement e-stamped

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.

To Conclude: The Documents Needed to Register a Stamp Duty

1) Documents that the landlord needs to present for registration –

  • Original copy proof of ownership of the property
  • 2 passport size photos
  • Aadhar card
  • Any government-issued ID proof like driving license, voter’s ID, passport, etc
  • The rental agreement printed on the Stamp paper for more value 

2) Documents that the Tenant needs to present for registration –

  • 2 passport size photos
  • Aadhar card if Indian. If not, the office will need his/her original passport
  • A board resolution/authorization letter validating the person’s right to register the lease
  • Company seal if registered by the company

If representing another person for the registration – The power of Attorney should be presented

FAQs:Everything You Need To Know About Stamp Duty On Rental Agreement

1) Why is a rental agreement executed on stamp paper necessary ?

This rental agreement comes in handy since most institutions like banks, gas distribution, HRA claims, school applications, vehicle purchases, telephone connections, etc would ask for it as a rental address.

2) Do stamp papers have an expiry date ?

Although the stamp papers can be used after six months of purchase, the unused ones must be given back to the collector within six months for a refund. Legally, using old stamp papers is not recommended.

3) Is the rent agreement registration compulsory ?

Registration is important if you have a rent agreement of a year or more. On the other hand, for those that are of less than a year, the stamp duty charge is applicable with no mandatory registration.
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