Stamp Duty in India and Its Importance

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Stamp Duty in India and its Importance
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mp-Duty-in-India-and-its-Importance

• 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. 

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mp-Duty-in-India-and-its-Importance

• 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.

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mp-Duty-in-India-and-its-Importance

• 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.

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