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. Stamp Duty on rent agreement creates a legal relationship between the tenant and the landlord to govern the tenancy period. It is payable under section 3 of the Indian Stamp Act, 1899.
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Why do you need a rent agreement?
A rent agreement is a legally binding document that creates a legal relationship between the tenant and the landlord.
What is the time period for the rental agreement?
It is usually preferred by the landowner and/or tenant to make a contract for 11 months to avoid any potential complications in the future.
Rates of Stamp Duty in Different States
Stamp duty is a state subject, so every state levied the tax accordingly. Different factors play different roles in deciding the rates of stamp duty. Factors like the gender of the buyer, age, purpose, and location heavily influence the amount you’ll have to pay as stamp duty.
For rental agreements made for a period of 11 months or less, a stamp paper of Rs100 or Rs200 can be utilized. It should be remembered that every rent agreement must be registered if the period is of more than 11 months.
Let’s see how various states and territories in India levied taxes.
Rates of Stamp Duty in Maharashtra
- In Maharashtra, stamp duty on the rental agreement is regulated by the Bombay Stamp Act, 1958.
- The rate of stamp duty is 0.25% of the total rent for the period not exceeding 60 months. You can access everything you need to know about the Maharashtra rent agreement with housewise.
- Your registration charge usually varies from Rs 1000 if the property is in a municipal corporation area, to Rs 500 if the property is in a rural area.
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Rates of Stamp Duty in Delhi
- For registered rental agreements in Delhi,
- The cost of stamp paper is 2% of the total average annual rent plus Rs 100 as the security deposit, this rate applies for the period of 1 to 4 years.
- It raises to 5% of the value of the average annual rent for a lease period of 5 to 10 years.
- When this period raises anywhere between 10 to 20 years, then the rate shall be 5% of double the value of average annual rent. Along with this you also need to pay Rs. 1100 for the registration charges.
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Rates of Stamp Duty in Hyderabad
- In Hyderabad, for a period of less than 1 year, stamp duty is 0.4% of the total rent payable in the lease. It is not compulsory for the rental agreement, in this case, to be registered.
- For registered rental agreements,
- For a period of 1 to 5 years, stamp duty is 0.5% of the average annual rent.
- For a period of 5 to 10 years, you have to pay 1% of the average annual rent
- For a period of 10 to 20 years, you have to pay 6% stamp duty on the average annual rent
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Rates of Stamp Duty in Bangalore
- In Bangalore, for a period of less than a year, the stamp duty charges on a rent agreement are 0.5% of the annual rent deposit or Rs 500, whichever is lower. It is not compulsory for the rental agreement, in this case, to be registered.
- For registered rental agreements,
- For a duration of 1 to 10 years, stamp duty charges are 1% of the annual rent deposit or Rs 500, whichever is lower
- For a period of 10 to 20 years, stamp duty charges are 2% of the annual rent deposit or Rs 500, whichever is lower.
- Registration charges are a minimum of Rs.200 and may range from 0.5% to 1% of the annual rent deposit.
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A notarized rent agreement might be easier to make than a registered rent agreement, but courts do not accept them in cases of legal disputes. Hence even if your rental agreement is notarized, it is always recommended to register it.
Is an online rent agreement valid?
Nowadays, an online rent agreement is also a good option, which you can avail yourself of at the comfort of your own house. An online agreement has the same value as a traditional rent agreement. It is much easier and less time-consuming. Housewise can work as your perfect partner in creating an online rent agreement. Create an online rent agreement with housewise.
Sources:
Property Registration Fees & Stamp Duty Charges in India (bankbazaar.com)
Why Rent Agreements are prepared for 11 months? – Times of India (indiatimes.com)