What is stamp duty on a rental agreement?
Stamp duty is a tax levied by the government on legal documents. This duty is also levied on the rent agreement, which is payable by the tenant. As these fees are set by the state government, stamp duty in Maharashtra is higher than in other states.
Why is stamp duty required?
In Maharashtra, registering the rental agreement is mandatory, regardless of the duration of the agreement. And for registering a document, it must be written on stamp paper.
Stamping a document makes it legally binding, and a legally binding agreement is proof of ownership or transfer. In a legal dispute, this registered agreement can be given in court as evidence.
How are stamp duty determined?
The stamp duty charges in Maharashtra are 0.25% of the total rent and security deposit.
Stamp duty calculator Maharashtra:
- A = Monthly rent x Time
- Advance rent + period/non-refundable deposit = B
- 10 percent x Refundable deposit x No of years of the agreement = C
- Total stamp duty = 0.25% x A+B+C
For example, A – Rs. 110,000 if the monthly rent is Rs. 10,000 whereas duration is 11 months. The advance rent – Rs. 10,000; B = 10,000. where C = 10% x 100000 x 1 = 10000.
A+ B+C = 110000 + 10000 + 10000 = 130000
Stamp Duty = 0.25% x 130000 = Rs. 325
Use this stamp duty calculator Maharashtra and find out your stamp duty charges.
What happens if you don’t pay stamp duty charges in Maharashtra?
Stamp duty is a one-time payment, and it has to be paid on time. Some people notarize their agreement to save on charges, but this is illegal.
If you fail to pay, you may face a fine and, in some cases, imprisonment. Hence, make sure to pay your stamp duty.
If you are looking to get a rent agreement in Maharashtra, contact Housewise.