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Stamp Duty

Stamp duty India is a tax, much like the sales tax and income tax that are collected by the Government. All such taxes must be paid in full and on time. If you make delay in the payment then you have to face the penalty. Penalty involves fine or even imprisonment. If you want to produce any instrument or document in the court, it needs to be done on the stamp paper only then it is considered valid and can be used as an evident. The court cannot admit instruments or documents that are not properly stamped as evidence. If you want to know the market value of your property and the stamp duty amount on it, you need to contact the Ready Reckoner as follows:

You should know the division/village name and C.S. /C.T.S. number of your property.
From the Ready Reckoner, locate your valuation zone and sub-zone with the help of the division/village name and C.S. /C.T.S. number of your property.

From the table know your rate per square meter, then multiply the rate with the built up area of your property in square meters. You will get a value. Reduce or increase this value for lift and depreciation as per the valuation factors given in the Ready Reckoner and you will get a market value. Find out the stamp duty amount applicable to you as per the market value. The office of the Superintendent of Stamps Department also does this procedure for you for a nominal fee.

Stamp Duty FAQ

How do I find out the Stamp Duty Payable on my property?

You can find out the market value of your property and the stamp duty amount on it from the Ready Reckoner as follows:-

You should know the division/village name and C.S. /C.T.S. number of your property.

From the Ready Reckoner, locate your valuation zone and sub-zone with the help of the division/village name and C.S./C.T.S. number of your property.

The Department also does this procedure for you for a nominal fee.

The process of valuing the property and arriving at its market value and ascertaining the proper stamp duty is called adjudication.

For adjudication, one can apply to the Collector of Stamps along with copy of the agreement containing the details of the property.

The adjudication fee payable is Rs.100.

In case of a signed document, adjudication must be done within one month otherwise two percent interest per month will be levied as penalty from the date of signature.

An adjudicated unsigned document is valid up to six months from the date of adjudication order up to December 31 of that year whichever is earlier.

Stamp Duty FAQ

1. What is stamp duty? Why should stamp duty be paid?

It is tax, similar to sales tax and income tax collected by the Government, and must be paid in full and on time. If there is delay in payment, it attracts penalty. A stamp duty paid instrument/ document is considered a proper and legal instrument/ document and such gets evidentiary value and is admitted as evidence in courts. Instruments /documents not properly stamped are not admitted as evidence by the court.

2. What is the penalty for delayed payment?

If stamp duty is not paid on time, it attracts penalty at the rate of 2 % per month on the deficit amount of the stamp duty. However maximum penalty can be only 200% of the deficit amount of the stamp duty. (This amendment has come into force from 01-05-2001) Documents lodged with the sub-registrar/superintendent of stamps prior to any amnesty scheme will attract a lump sum penalty of Rs.250 or Rs.300 only, as the case maybe.

3. When is the stamp duty payable?

It 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 of the document means putting signature on the instrument by the person’s party to the document.

4. Who is liable to pay?

In the absence of any agreement to the contrary, the purchaser/transferee has to pay stamp duty or in case of exchange of properties, both parties have to bear stamp duty equally.

5. Is stamp duty payable on all instruments/ documents relating to the transfer of immovable property?

Except transfer by will (or by original nomination in a cooperative housing society) all transfer instruments/documents including agreements to sell, conveyance deed, gift deed, mortgage deed, exchange deed, deed of partition, power of attorneys, leave and license agreement, agreement of tenancy and lease deeds have to be properly stamped before registration.

It is clarified that a when a nominee transfers the flat subsequently in the name of the legal heirs, that transfer instrument is to be stamped as per the market value. If you have purchased a flat in a co-operative housing society on or after 10-12-1985 you have to pay the stamp duty on market value as per the Ready Reckoner. A flat purchased through an agreement for sale on or before 9-12-1985 required stamp paper of Rs.5 only. However a flat purchased on or before 9-12-1985 will require stamp duty on market value at the time of conveyance of the property in favour of the society. The concept of payment of stamp duty on market value was introduced from 04-07-1980 will be charged on agreement value only.

6. What is the relevance of the dates 10-12-1985 and 04-07-1980?

For any flat purchased in a co operative housing society on or after 10-12-1985, it is required to pay stamp duty on market value at the time of signing the agreement itself. However, prior to 10-12-1985, such transactions of agreement for sale required a stamp paper of Rs.5 only at the time of signing the agreement. However stamp duty on market value will have to paid on all such transactions at the time of conveyance of the property in favour of the society.

From 04-07—1980 onwards, if the property is not covered under the Co-operative Society Act, you are required to pay stamp duty on market value. This payment is required at the time of execution of the document. However, prior to 04-07-1980 there was no market value concept hence agreement value was accepted for stamp duty payment.

7. In whose name should the stamp paper be purchased?

From 01/05/1994 stamp paper are to be purchased in the name of one of the parties to the instrument/ document. If the stamp paper is not in the name of the parties and if it is used for preparing the agreement, it will be as if no stamp paper was used. However it will not make the agreement invalid and can be enforced in law if proper stamp duty is paid subsequently.

Prior to 01/05/1995 stamp paper could be purchased in any name and was valid for any period of time. However from 01/05/1994 stamp paper is valid for a period of six months from the date of purchase and after that it is treated as ordinary paper as if it has no stamp.

8. Is stamp duty payable on the instrument or on the transaction?

It is payable on instruments and not on transactions. Stamp duty should be charged on the basis of the contents of the instrument only. If any information essential for working out stamp duty is missing in the instrument, valuation officer can call for it. Information such as the area of the flat, number of the floors and year of construction must be mentioned in the agreement for quicker response.

9. What are the instruments on which it is to be paid?

Instruments include every document by which any right or liability is or purports to be created, transferred, limited, extended, extinguished or recorded but does 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).

10. What is the extent of application of the Bombay Stamp Act, 1958?

The Act applies to the whole of the State of Maharashtra.

11. What is an "Instrument" under the Act?

'Instrument' includes every document by which any right or liability is or purports to he created, transferred, limited, extended, extinguished or recorded, but does not include a bill of exchange, cheque, promissory note, bill of lading, letter of credit, policy of insurance, transfer of share, debenture, proxy and receipt."

12. What is market value?

Market value in relation to any property which is the subject matter of an instrument means the price which such property would have fetched if sold in the open market on the date of execution of such instrument or the consideration mentioned in the instrument, whichever is higher. The price which such property would have fetched if sold in the open market is determined on the basis of the Ready Reckoner issued each year. Depreciation in stamp duty is available for old buildings and building without lift.

13. When is stamp duty payable on an instrument in Maharashtra?

All instrument are liable to be stamped before or at the time of execution of instrument or immediately thereafter on the next working day following the date of execution, when executed in the State of Maharashtra. Any instrument executed outside the state is liable to duty only on receipt of such instrument in the state, provided it relates to a property situated in the state, or a matter or thing to be done in the state. Stamp duty is not levied on a transaction, but on an instrument.

14. What is the rate at which stamp duty is payable?

Stamp duty is payable at the rate mentioned in Amendment Act, 2004 of the Bombay Stamp Act, 1958.

15. Which documents are required to be compulsorily registered?

Documents listed in Section 17 of the Indian Registration Act, 1908 are to be registered compulsorily. Registration of documents listed in Section 18 of the Indian Registration Act, 1908 is optional. An agreement for leave and licence is required to be compulsorily registered under the Maharashtra Rent Control Act, 1999.

16. Is there a time limit within which documents should be registered?

Yes. Documents must be registered within 4 months of the date of execution. Thereafter, documents can be registered within the next 4 months on payment of penalty.

17. Who is required to pay stamp duty and registration fee on purchase or lease of a flat or office?

A purchaser (whether on first sale from a developer or on resale of a flat) or a lessee of a flat or office is required to pay stamp duty and registration fee.

18. How is stamp duty paid in Maharashtra?

A lot of Banks both private and public sector banks accept the Stamp Duty payments. The documents are given to them and usually you can get the same back from them in a few hours.

19. What is the procedure for registration of an instrument?

Once adequate stamp duty is affixed on an instrument or franking is done on the document and it is dated, signed by the parties and attested (where required) by witnesses, it can be lodged for registration after payment of the registration fee. All parties signing the instrument are required to attend the office of the concerned Sub Registrar of Assurances either by themselves or through their constituted attorney under a power of attorney to admit execution of the instrument. A passport size photograph, original power of attorney, personal identification such as passport or income tax PAN Card, adequate xerox copies of the original instrument are some of the essentials required for registration.

After lodging an instrument, it is registered and seal of the Sub Registrar is affixed on the instrument, thereafter the original instrument is returned back to the parties.

20. Is there a restriction on the name in which stamp paper must be purchased?

Yes. Therefore the stamp paper should be purchased in the name of one of the parties who would be signing the instrument.

21. Is there a time frame within which the stamp paper must be used?

Yes. Stamp paper should be used within 6 months from date of purchase. Any stamps not used within this period are invalid.

22. Is there a penalty for not paying the requisite stamp duty?

Yes. Previously the penalty was an amount not exceeding 10 times the amount of the proper duty. As per the recent amendments, penalty of 2% per month on the proper duty for the period of default will be levied, subject to a maximum of 2 times the deficient portion of duty. Instruments are liable to be impounded till proper stamp duty is paid.

23. What are the consequences for not paying stamp duty on an instrument?

In case proper stamp duty is not paid on an instrument, the instrument is inadmissible as evidence.

24. Is it possible to get a refund of stamp duty already paid on an instrument?

Yes. If stamp duty is paid on an instrument but the instrument is not signed by any party then an application is to be made within 6 months of the date of purchase of the stamp paper, to the concerned authorities for refund of stamp duty. The original stamp paper is returned alongwith the application. On receipt of such application, the concerned authorities are empowered to refund the value of stamp duty after deducting such amounts as may prescribed.

25. Is stamp duty payable on a gift or resale of a flat?

Yes. Stamp duty is payable on instrument of gift or resale of a flat.

26. When can an instrument be impounded?

When an instrument is presented for registration and the concerned authorities have reasons to believe that an instrument does not reflect the true market value and they can take steps for recovery of the stamp duty including impounding of instruments. If the collector determines that the proper stamp duty has not been paid then penalty can be levied on such instruments.

27. Is there a procedure for adjudication of stamp duty?

A person can seek the opinion of the Collector of Stamps by making an application to him for adjudication of stamp duty payable by such person on the instrument. For this purpose, the person who is a party to the instrument has to furnish a true copy of the instrument and an affidavit stating the facts and such other evidences as required, along with prescribed fee. The Collector's opinion is final and conclusive. No appeal lies against his order of adjudication.

28. Can a person grant a power of attorney for signing and registering instrument?

Yes. Persons residing abroad or those who travel frequently are advised to grant power of attorneys to facilitate better management of their flats.

29. Can a person grant a power of attorney for registering instruments?

Yes, but his power of attorney must be registered before the Sub Registrar of Assurances.

How do I find out the Stamp Duty Payable on my property?

You can find out the market value of your property and the stamp duty amount on it from the Ready Reckoner as follows:-

You should know the division/village name and C.S. /C.T.S. number of your property.

From the Ready Reckoner, locate your valuation zone and sub-zone with the help of the division/village name and C.S./C.T.S. number of your property.

The Department also does this procedure for you for a nominal fee.

The process of valuing the property and arriving at its market value and ascertaining the proper stamp duty is called adjudication.

For adjudication, one can apply to the Collector of Stamps along with copy of the agreement containing the details of the property.

The adjudication fee payable is Rs.100.

In case of a signed document, adjudication must be done within one month otherwise two percent interest per month will be levied as penalty from the date of signature.

An adjudicated unsigned document is valid up to six months from the date of adjudication order up to December 31 of that year whichever is earlier.

The addresses of the stamp office in Mumbai are as under –

The Superintendent of Stamps

General Stamp Office,

Ground Floor,Town Hall Building,

Shahid Bhagatsingh Road,Fort,

Mumbai 400 023.

Ph: 266 4589, 266 4585.

Office of the Superintendent of Stamps

First Floor, B.M.R.D.A. Building,

Bandra (East), Mumbai 400 051.

Stamp Office

Town Hall,

Collector's Office Compound,

Thane (West) 400 601.

Source: realestatemumbai.com