Introduction:

Stamp duty is a tax levied by the state on documents that are registered with the government. In India, the Indian Stamp Act, 1899, governs the guidelines for stamp duty. It is a state subject under. There are certain documents specified by law which require mandatory stamp duty as specified in Section 3 of the said act. Without the due payment of prescribed stamp duty these would be but just papers.

The Act was introduced by the British during the colonial period as a means to yield revenue. Stamp duty is a state matter and can only be levied by the state. In India, each state fixes its own rates on duties. Simply put, it is nothing but a charge on the service of registration provided by the bureaucracy.

Registration:

The Indian Registration Act, 1908, governs the registration of documents. The Act specifies the documents that require compulsory registration in Section 17 and the ones whose registration is optional in section 18. In cases of immovable property, it must be presented to the sub registrar of the sub district in which the property is located (Section 28).

Need for Registration:

1. It will be registered with the government safely: Record of the ownership of immovable properties are safely kept with the registrar. For instance, in the case of lands, it is better to register both the sale deed (transfer of the land) and the ownership of the current landowner.

2. It gives legality to the documents: Registration of documents through due procedure and verifications will assure the genuineness of the document’s background. This thus makes it highly reliable and gives it a legal status. This will later safeguard the persons during settlement of disputes in a court of law or any government body.

3. Evidentiary value: They are the evidence of a person’s title/ownership of any immovable property, amount of considerations in a trade document, or other vital information. Hence in order to protect oneself against fraud and other malpractices, it is always advisable to register the documents.

Some documents that are to be registered compulsorily:

Immovable

• Gifts of immovable property – Section 123 of the transfer of property act requires the gist deeds to be registered for the transfer of title of the property to be legally enforceable.
• Instrument of partition of immovable property.
• Lease of immovable property.

Movable

• Transfer of decree, order or award of court.
• Authority to adopt a son.
• Receipts of transaction of movable consideration.
• Receipts of monetary considerations received.

Registration procedure:

• Time Limit (S.23) – Within four months of the execution of the document, it must be presented for registration before the appropriate authority. Wills are exempted from this limitation.
• Delay in presentation (S.25) – The registrar should be convinced that the delay in presentation of the document (except Will) for registration is due to an accident or an urgent necessity. A fine amount not exceeding ten times the registration-fee is imposed and then the document is accepted for registration. This process is initiated through an application to the sub-registrar.
• Place of registration (S.28) – Documents of immovable property must be registered with the sub-registrar’s office in which the property or a part of it is located. Any other document must be registered either with the sub-registrar in whose district the document has been executed or in any other sub registrar’s office whose district the parties want the document to be registered. Under special causes, the registrar may go to the residence of the party to register their document or deposit their Will.
• Who can present (S.32) – The documents or copy of decree or order can be presented for registration by a person who is executing or claiming under the document or decree or order respectively. It can also be presented by a representative or assignee of such a person. The agents of such person or the representative or assignee can also present it provided that they were duly authorised by power- of- attorney executed and authenticated properly (S.33).
• Presentation (S.80) – The document must be presented for registration with a passport size and fingerprints of the party/parties of the document along with the fees for the registration of documents under this Act.

Types of stamp duty:

• Impressed stamps - stamps that are embossed/fixed/impressed. For instance, stamp papers.
• Adhesive stamps -ones that can be stuck on the documents. These can be classified as postal and non-postal stamps.
• E-stamps- electronic stamping whose record is stored online and a certificate of stamping is issued.

Usage of these in a document denotes due payment of stamp duty up to the face value of the stamp.

Calculation of stamp duty:

It is calculated based on the value of the property. It comes up to 10% of either the value of the property at the time of registration or on its minimum value as fixed by the local authorities, whichever is higher.

Stamp duty differs from state to state and one must exercise due care and caution while ascertaining the stamp value for their instrument. One of the general burdens faced by the stamp duty is that after the GST laws came into existence, people are burdened with double taxation while buying under-construction houses. They are having to pay 12% GST along with a 5%-10% stamp duty during registration. This gives rise to the said problem double taxation to the buyers. It has been suggested by experts that stamp duty on real estates exclusively should be abolished and added to the new GST laws.