What is Stamp Duty?

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Definition of stamp duty

Stamp Duty is a type of tax or duty which is paid for transactions performed within the state by way of documents, where such documents are liable to be stamped as per the provisions of State Stamp Act and Indian Stamp Act, 1899. Such documents include all Agreements, Bonds, Powers of Attorney and others.

Stamp duty is one of the major sources of revenue for every state. For the state of Maharashtra, stamp duty is the second largest source of revenue after sales tax.

Documents that attract stamp duty

Stamp duty is levied on certain types of documents executed in the state. The various instruments/documents on which stamp duty is levied, and rates at which stamp duty is levied on these documents, are mentioned in the applicable State Stamp Act and Indian Stamp Act, 1899.

In terms of property-related stamp duty, the kinds of documents that attract this tax include agreements pertaining to the deposit of title deeds, mortgage deeds, certificates of sale, conveyances, agreement of sale/sale deeds/transfer deeds, leave and license, lease deeds, exchange of property, gift deeds, partition deeds, powers of Attorney, re-conveyance of mortgaged property, surrender of lease, transfer of lease, etc.

Stamp of legality

The payment of proper stamp duty on a document creates its legality. Such document attains evidentiary value and is admissible as evidence in a court of law. Documents that are not properly stamped, or are unstamped, are not admissible as evidence.

Generally, all document executed in the state require to be stamped before the execution (signing) of the document. Stamp duty is paid by purchasing stamp paper, adhesive stamps and by franking.

Who pays stamp duty?

The normal practice in purchase transactions is that the buyer pays the stamp duty. It must be ensured that, in any event, stamp duty is not purchased in the name of a person/party who is not party to the document. If this happens, it will be treated as a document executed (signed) on unstamped paper and is admissible as evidence in a court of law. Therefore, stamp duty should be always purchased in the name party to the agreement.

Validity of stamp duty

In the state of Maharashtra, stamp duty purchase is valid for the period of six month from the date of purchase. Therefore, the document must be executed within a period of six month of purchase of stamp duty. The validity period may vary from state to state.

The quantum of dividend shall be Rs 0.0389 per unit. The record date has been fixed as April 03, 2014.

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