Stamp Duty in India and Its Importance

1. Stamp Duty in India and its Importance

2. Stamp Duty is a tax collected by the Government of India under the Section 3 of the Indian Stamp Act, 1899. • The Stamp Duty act in India was first introduced to raise the revenue to the Government of India; but with passing years, it has slowly obtained so much importance that a ‘Stamped Document’ is considered to be bona fide and more reliable than unstamped documents. • Stamp Duty is similar to sales tax, income tax, etc. which are collected by the Government.  • The payable amount may be fixed or varying depending upon the value of the properties, products or services on which it is levied upon. • The Stamp Duty rates vary among the different states of India and also on the property type, whether it is a new one or an old one.  For Ref: http://swethamohan12.hubpages.com/hub/Stamp-Duty-in-India-and-its-Importance

3. Stamp Duty is a tax which is payable on many legal documents specified by the Law, and is basically considered to be a tax made on any transactions or exchange of documents or effecting of instruments. • Usually, stamp duty payments must be made in full and must be on time, otherwise it attracts penalty. • The payment of Stamp Duty should be done before the execution of the document or it must be done on the day of registration.  • Failing to make the necessary payment will result in penalty charges, which starts at a minimum of 2% for every month which has elapsed and can go up to 200% of the defaulted amount. •  All the documents which have been registered without the Stamp Duty charges will be valid only for a period of 6 months and these documents are either registered in the name of the buyer or the seller. For Ref: http://swethamohan12.hubpages.com/hub/Stamp-Duty-in-India-and-its-Importance

4. They are generally sorted into three categories, based upon the transaction for the purpose of the stamp duty: • First category – In this category, the stamp duty payable is always fixed regardless of the value which is mentioned in the document or the instrument. Examples include Affidavits, Administration Bonds, Cancellation Deeds, Charter Party, Indemnity Bonds, Duplicates, Power of Attorney, etc. • Second category – In this category, the stamp duty charges are based upon the values which are mentioned in the documents. Examples include Lease agreements, Mortgage deeds, Title deeds, Hypothecation deeds, Security bonds, Articles of Association, etc. • Third category – In this category, the stamp duty payable depends either upon the value mentioned in the documents or is based on the true value market price, whichever is higher. Examples include Agreements for sale, Conveyance, Partnership deeds, Transfer of Immovable Property, Partitions, Trust deeds and so on. For Ref: http://swethamohan12.hubpages.com/hub/Stamp-Duty-in-India-and-its-Importance

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