Stamp Duty

Tax

Quick Definition

Stamp Duty is a government tax paid on legal documents and transactions, especially for property purchases, agreements, and financial instruments.

Detailed Explanation

Stamp Duty is charged by state governments on legal documents to make them valid and enforceable in law. It is commonly applied to property transactions, rental agreements, loan documents, and share transfers.

In India, stamp duty rules are governed under the Indian Stamp Act 1899, but rates vary by state.

Where Stamp Duty Applies

  • Property purchase and registration
  • Lease or rental agreements
  • Loan agreements
  • Share transfer documents

How Stamp Duty is Calculated

  • Based on property value or transaction value
  • Rates vary by state and type of document

Why Stamp Duty Matters

  • Legalizes documents
  • Acts as proof of transaction
  • Generates government revenue

Stamp Duty vs Registration Charges

  • Stamp Duty: Tax on document
  • Registration Charges: Fee for registering document

Example

"If you buy a property worth ₹50 lakh and stamp duty is 5%, you pay ₹2.5 lakh as stamp duty."

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