WHAT IS STAMP DUTY?
What is stamp duty, types of stamp duties, documents on which stamp duty is affixed.
Merely possessing the property is not sufficient, one also needs to have legal evidence of ownership. Property needs to get registered in the local municipal records in the owner name, with the seller documenting, the property to be transferred to you.
At the time of registration, a stamp duty is paid, which is a government tax levied on property transactions.
Stamp duty is collected on the basis of property value at the time of registration.
Stamp duty’s amount varies from state to state and also property type—old or new. Since, stamp duty, adds up to the property cost, a fair idea of the amount must be roughly calculated, before finalizing the property deal.
Stamp duty is a legal tax payable in full and acts as an evidence for any sale or purchase of a property.
The levy of stamp duty is a state subject and thus the rates of stamp duty vary from state to state. The Centre levies stamp duty on specified instruments and also fixes the rates for these instruments.
TYPES OF STAMP DUTIES:
Two types of stamp duties used in India, by way of;
i) Impressed stamps ii)Adhesive stamp
Impressed stamps classified as:
- Labels affixed and impressed by proper officer,
- Stamps embossed or engraved on stamp paper, and
- Impressions by franking machines generally done by the bank by depositing the necessary amount of stamp duty with the banks.
The Adhesive stamps are labels which can be conveniently stuck on the instruments.
These stamps can be further categorized into two categories: postal and non-postal stamps.
Postal stamps are used only for transaction with the post office and related function whereas a non-postal stamp can be a court fee stamp, revenue stamp, notarial stamp, special adhesive stamp, foreign bill stamp, brokers’ note, insurance policy stamp or a share transfer stamp.
Kind of documents is stamp duty levied on?
The various types of stamp duties, in India, is generally levied on transfer of property, shares, debentures, bill of exchange, conveyance deed, hire purchase, promissory note and movable and immovable assets. It is also used for partnership deed, gift deed, lease agreement, rent agreement, increase in authorized capital, agreement of sale, buying a house, bank guarantee, commercial property, home loan, loan agreement, mortgage, and service apartment.
In real estate transaction that involves buying, selling, renting, and leasing of a residential or commercial property, stamp duty of required value are paid before signing it as the documents are not producible in a Court unless properly stamped.