Frequently Asked Questions (FAQs) Related to Stamp Duty of a Property

Stamp duty paid during the transferring of a property is always a subject that only few people know. So, here are some of the most frequently asked questions on the same.

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FAQs Related to Stamp Duty of a Property
FAQs Related to Stamp Duty of a Property

Buying a property is a life changing experience for each one of us. You put all your hard-earned money only to purchase your dream home. But, things are not just limited to purchasing the home, you also have to get it registered by the state government on stamp papers, which is undoubtedly a tedious task. So, for the most obvious reasons, it becomes crucial for you to know everything about stamp duty that you have to pay on the property.

What is Stamp Duty?

Stamp Duty is a type of tax that is taken by the state government on all legal documents during transfer of property or assets. Stamp Duty is a proof of sale or purchase of any property between two or more parties, and can be submitted in the court as an evidence. It is payable under Section 3 of the Indian Stamp Act, 1899. Stamp paper can be bought in the name of seller or buyer and is valid only for 6 months.

When is Stamp Duty Payable?

Stamp duty is usually payable on the day of execution of the documents, before execution or the next day of their execution. In legal terms, execution means signing the instrument. In most cases, stamp duty is made by a buyer. But in property exchange cases, both buyer and seller have to have to share the burden of stamp duty.

What is the Penalty Charge?

Any delay in the payment of stamp duty after the stipulated time period will attract a penalty from 2% to 200% per month of the deficit amount. Stamp papers come with a validity of not more than six months from the date of purchasing, only when the duty is paid timely.

How to Sign an Instrument Affixed with Adhesive Stamp?

As per the provisions of Section 12 of the Indian Stamp Act, 1899, a person executing the instrument, affixed with an adhesive stamp, shall cancel it by writing his/her name or initials across it. If the stamp is not cancelled in the said manner, the instrument will be considered unstamped. In simple words, the stamp should be clearly visible on the face of the instrument and it cannot be used again for any other instrument.

What is Instrument?

The instrument is a legal or formal document in writing that records express any legal enforcement act, contractual duty, or right and evidence that process, act or agreement. The instrument used in stamp duty of a property should have information like year of construction, area of the flat and number of floors for a quicker response.

Is it Mandatory to Pay Stamp Duty on All Instruments Related to Transfer of Immovable Property?

The stamp duty is to be paid on all the documents including gift deed, conveyance deed, agreements to sell, the power of attorneys, agreement of tenancy and lease deeds, exchange deed, mortgage deed, deed of partition, leave and license agreement except for transfer by will.

1 COMMENT

  1. Slight correction in the Article required, stamp paper validity for stamp duty purposes is not 6 months. Its validity does not expire except for small denomination papers. In fact, the validity for refund of stamp paper is 6 months.

    Also Penalty on the deficit stamp duty is the entire stamp duty amount plus a penalty of maximum 10% of the stamp duty amount.

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