Stamp duty

Stamp duty is a tax on documents, not on the transaction itself. When you sign a sale deed, a rent agreement, a gift deed or even an affidavit, the law expects the paper to carry the right amount of stamp duty. You pay it by buying stamp paper, an e-stamp certificate or by franking.

The law behind it

The Indian Stamp Act, 1899 is the central law, and many States have their own stamp Acts or amendments (the Maharashtra Stamp Act, 1958 is one example). The rates are set by each State, so the duty on the same document can differ a lot between, say, Delhi, Karnataka and West Bengal. Property documents are usually charged on the market value or the consideration, whichever is higher.

Under Section 17 of the Indian Stamp Act, 1899, a document signed in India must be stamped before or at the time of signing. Under Section 35, a document that is not properly stamped cannot be used as evidence until the shortfall and a penalty are paid, and Section 33 lets a court or officer impound it.

When you meet it

• Buying or gifting property, and every lease or rent agreement.
• Agreements between businesses, guarantees, indemnity bonds and powers of attorney.
• Affidavits and undertakings filed with an office or a court.

Read more in the guide on rent agreement stamp duty and registration.