What is the Rent Agreement?
A rent agreement is an agreement between two parties, the owner and the tenant, for the renting of a property within the laws and regulations set out by the Indian government. It is essential for both the tenant and the owner. After drafting the rental agreement, the tenant is assured of the rented property and the owner benefits from it as well since it protects their property from any illegal activity. The option of creating an online rent agreement is also available which is similar to the traditional notarized agreement.
What is the Stamp Duty on Rent Agreement?
Stamp duty is imposed under Section 3 of the Indian Stamp Act of 1899 which applies throughout India but with the exception of certain states that have their own stamp duty laws. The stamp duty value is hence state-specific. Stamp duty is the tax amount that is paid to the government for the execution of various sorts of papers or documents relating to some form of financial exchange, transaction, or commitment. Therefore, you are required to pay stamp duty when you sign a rental agreement.
The relevant documents required for a rent agreement are as follows:
- The original proof of ownership or title to the property.
- Two passport size photos
- Aadhar card
- Any Government ID proof such as driving licence, voter’s ID, passport etc.
- The rental agreement printed on the Stamp paper
Can Rent Agreement be Used for GST Registration?
One of the main requirements for GST registration is proof of the principal place of business. Statutes provide permissibility to rented or leased premises as proof of principal place of business. According to CGST Rules, 2017 read with CGST Rules, 2017 for GST registration a copy of the current rental agreement, together with any document proving the owner’s ownership of the premises, such as the most recent property tax receipt or a copy of the Electricity Bill is admissible as proof of principal place of business.
Is Police Verification Mandatory for Rent Agreement?
For obvious security reasons, police verification has become essential for rental agreements. The owner of the premises is obligated by law to obtain police verification of their tenants when renting out their property. To verify the background and examine facts such as previous residences, family members, criminal records, and so on of the tenant police verification is carried out. The owner bears the burden of following the procedure and if he fails to do it he may face repercussions. While the police verification is good to have in every location, its mandatory by law in some states like in Maharashtra.
What is the Cost of Registering a Rent Agreement?
For the registration of a rent agreement, an amount of Rs 1100/- is usually required but the cost may vary depending on the State.