Procedure To File Stamp Duty in India

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What is Stamp Duty?

Stamp duty is a government tax and is similar to other taxes charged by the government. It is levied on all legal property transactions. The fees collected here are used for transactions that consist of legal documents such as sale deed, conveyance deed, and sale agreement. 

In other words, stamp duty is a tax that is paid for any documents. It consists of documents by which any right or liability is to be created, extinguished, transferred, extended, or recorded. Stamp papers, which have been bought either in the name of the seller or buyer is valid for six months period. Also provided the stamp duty is paid without any delay.

Stamp Duty Act:

The Stamp duty is paid as per the provisions given under Section 3 of the Indian Stamp Act, 1899. The Stamp duty is levied to boost revenue for local governments. It also lends legality to a document.

Documents which require Stamp Duty:

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The documents which require stamp duty are mentioned below:

  1. The Transfer instruments
  2. The Deed of partition
  3. The Reconveyance of the mortgaged property
  4. The Mortgage deed
  5. The Certificates of sale
  6. The Gift Deed
  7. The Exchange deed
  8. The Tenancy agreement
  9. The Power of attorneys
  10. The License agreement
  11. The Lease deeds

Calculation of Stamp Duty:

According to the market value or the agreement value of the property, the stamp duty is calculated.  It is to be paid only on the contents of the registration document and not on the transaction value. Moreover, it is charged on every agreement and not on every individual who is a part of the transaction.

The stamp duty authorities approach a Stamp Duty Ready Reckoner to calculate the market value. It is issued on the 1st of January every year. The charges for this purpose are levied by the respective state governments. The following factors are considered to play a role in determining the cost of the property:

  • The age of the property
  • The Gender of the property owner
  • The Agricultural or non-agricultural classification
  • The Freehold or leasehold classification
  • The Residential or commercial units classification
  • The Multi-storied apartments or independent houses classification
  • The Rural or urban property classification

Stamp Duty payment:

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Stamp duty is to be paid before or at the time of executing the deed by a property buyer. Hence, it is either paid before the day it is to be executed or on the day when the buyer executes the deed.

Payment Modes:

The payment of stamp duty is classified into the following three modes:

  • The Physical stamp paper
  • The Franking
  • The E-stamping

Also, not all payment modes are applicable in every state.

  • Physical Stamp Paper

Paying through physical stamp paper is the most common way of paying stamp duty. The property buyer has to buy the non-judicial stamp paper from an authorized vendor. After the stamp paper is purchased, the transaction details can be written or typed on them. However, in case the cost of stamp duty charges is high then this method becomes inconvenient as it becomes expensive. Hence, this traditional form of payment is not preferred by many property buyers.

  • E-Stamping

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E-stamping is the most convenient way to pay stamp duty charges. You can do so online via the SHCIL website that is the Stock Holding Corporation of India. The Indian Government has introduced e-stamping to avoid the forging of stamp papers and to simplify the stamping process. It is simply is an online mode of stamping. The Stock Holding Corporation of India Limited (SHCIL) is authorized as the official vendor for e-stamping. Also, it is considered as the Central Record Keeping Agency for all e-stamp papers used in India.

Benefits of E-Stamping:

The benefits of e-stamping are mentioned below:

  • A convenient and simplified process.
  • The e-stamp is verified using the UCN number.

Procedure for E-Stamping:

A step by step guide for E-Stamping which are as follows:

STEP 1: Log in to the website

The property buyer has to log in to the SHCIL website which is the official website available at https://www.shcilestamp.com/

STEP 2: Transaction Information

You are provided with the transaction information that is required for e-stamping. You also get the list of collection centres that issues certificates to those who e-stamp.

STEP 3: Fill the Application

You have to fill the application and submit it to the collection centre.

STEP 4: Payment of E-Stamping

You have to submit the application by making the appropriate payment methods. You can make the payment by using Debit Cards, Credit Cards, cheque, demand drafts, and online banking.

STEP 5: E-Stamp Certificate

After you have made the stamp duty payment, the user gets the e-stamp certificate.

STEP 6: Unique Certificate Number

The e-stamp certificate consists of a Unique Certificate Number (UCN). It also mentions the issue date. After the e-stamp is issued, a duplicate of the e-stamp will not be granted.

  1. Franking

In this method, you need to go to an authorized franking agent, who will apply a stamp to your property documents. He/she will indicate to you that the stamp duty has been paid. A minimum amount is required to be paid for this method to be used. Also, a franking charge is levied by the agent, which is then deducted from the overall stamp duty which is to be paid by you. Although, most banks offer franking agent services to home buyers.


References:

https://www.indiafilings.com/learn/stamp-duty-and-registration-of-property/

https://www.bankbazaar.com/tax/stamp-duty.html

https://dwello.in/news/stamp-duty-and-registration-charges


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About the Author

Deepshikha Mishrahttp://astromata.com
Deepshikha Mishra is Co-Founder & Legal Head at astromata.com - Legal strategic partner at SAS Exim -Legal Counsel at Galleon - Legal Advisor at Taxolawgy - Astrologer at Guruji app – Law Content Developer & Educator at UPSC coachings and Unacademy. BBA.LLB- Business & Taxation Laws, CM. Cyber Crime Laws. Pers. MD. Medical Laws from National Law School of India University, Bangalore. (Past intern & works - Supreme Court, High Courts, Human Rights Commission, Law firms, Path Legal, Libertatem Global Law News Network)
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