New Delhi, the capital of India, is one of the fastest growing cities situated in the northern part of India. Being known as the heart of India, New Delhi is one of the largest metropolis in the world, in terms of population. It is the political hub of India and has a fast growing real estate market, attracting more and more property registrations throughout the year and hence, leading to a significant rise in collection of Stamp duty, every year.
Stamp Duty Explained
According to Black’s Law Dictionary, Stamp duty is a tax raised by requiring stamps sold by the Govt. to be affixed to designated documents, thus, forming part of the perpetual revenue. Stamp duty is payable under Section 3 of the Indian Stamp Act, 1899. It varies from state to state.
Stamp duty is a fees payable legally based on the property value which acts as an evidence for any kind of purchase or sale.
Stamp Duty Payment – How, When, Why And By Whom?
Stamp duty should be placed on the face of the instrument and it is paid for execution of the instrument or exchange of document. Documents with necessary stamp duty payment will be considered as an evidence in court. Stamp duty can be paid through cash, cheque, bank draft, pay order and electronic fund transfer.
Stamp duty has to be paid fully on time, and the failure or delay in payment attracts penalty. It has to be paid at the time of execution of the document or the day before or day after the execution in India. For the documents executed out of India, stamp duty has to be paid within three months, once it is received in India.
To get the document registered and be legally effective in court, payment of stamp duty is mandatory. Otherwise, the document will not be legally enforceable in court and it cannot be registered too.
Stamp papers have to be purchased in the names of the parties to the contract. Stamp duty has to be paid by the buyer in case of sale of property and it will be shared by both the parties, if it is a property exchange.
Three Ways To Pay Stamp Duty
- By Franking Machine – The document for which the stamp duty needs to be paid is printed on a plain paper and stamp is affixed to the paper indicating the value of stamp duty paid. This can be done by submitting an application in an authorized bank or a franking agency.
- E-stamping facility – An electronic way of paying the stamp duty to the government and secured way of stamping the documents.
- Stamp paper having impressed stamps – Stamp paper is a piece of paper pre-printed with revenue stamps. The Law states that documents need to be printed on appropriate value of stamp papers for any required transaction. Stamp paper itself is the proof of payment of stamp duty. There are 2 types of stamp papers, which are-
- Judicial Stamp Papers – Stamp papers used in the court, like court fee stamp paper.
- Non-Judicial Stamp Papers – Stamp papers used for executing the documents. These stamp papers are available with Licensed stamp vendors.
*Revenue stamps are available at post offices.
Stamp Duty Types
Stamp duty is categorized into two types,
- Stamp Duty paid as per the Indian Stamp Act, 1899
- The Stamp used for payment of fees under the Court-fees Act, 1870
Stamp duty is paid either on the value of property (Ad valorem basis) or the value prescribed by the government.
How Is Stamp Duty Calculated?
Stamp duty is usually calculated as per the rates specified in the Indian Stamp Act or the State Stamp Act. However, in certain cases, the exact stamp duty to be paid will be calculated based on the document or instrument to be registered.
Stamp duty is calculated in three ways.
- Stamp duty will be a fixed one, irrespective of the value specified in the documents.
- Stamp duty payment is made based on the value given in the documents.
- Stamp duty is calculated as per the value prescribed in the document or on the market value, whichever is higher. The market value is determined by the authorities in the office of stamp duty in the area in which the property is situated.
Documents On Which Stamp Duty Is Levied
Below is the list of some of the documents on which stamp duty is levied-
- Bill of Exchange
- Agreement of Sale
- Conveyance deed
- Gift deed
- Movable and Immovable assets
- Increase in authorized capital
- Promissory Note
- Transfer of property
- Hire Purchase
- Lease agreement
- Rental Agreement
- Bank Guarantee
- Agreement of sale
- Service Apartment
- Loan Agreement
- Home Loan
- Lease property
- Rental properties
- Selling and buying
and many more…
Failure or delay in payment of stamp duty for document attracts penalty of a minimum of 2% to a maximum of 200% per month on the unpaid amount. The penalty for failure of stamp duty payment involves fine or imprisonment.
Refund Of Stamp Duty
Stamp duty can be claimed within 6 months of the stamp purchased by producing an application along with required documents, including original Challan and receipt issued by the bank to the concerned department/officer. There will be a deduction of 10% of the stamp duty paid in case of a refund.
Cash Payment In The Absence Of Stamps
In the case of temporary shortage of stamps in the district or the required denominations of stamps are not available, then cash payment can be made to the authorized officer by producing a challan as a proof of stamp duty payment to the government treasury. The payment of cash is specified under Section 10A of The Indian Stamp Act.
We have covered the important things to know about stamp duty in Delhi. Stamp duty is a kind of revenue to the government. So, it is everyone’s duty to pay the required amount of stamp duty to the government for the transactions taking place. For drafting any legal documents, online Will template, affidavits and more, please log on to Legaldesk.com. You can also avail print n deliver service with Stamp paper, in case you have a draft to be printed on Stamp paper and delivered to your address.