Stamp Duty Payable on Agreement to Sell: Everything You Need to Know
When it comes to buying or selling a property, there are several legal requirements and taxes that must be paid. One such tax is stamp duty, which is payable on the agreement to sell of any immovable property. In this article, we will discuss everything you need to know about the stamp duty payable on agreement to sell.
What is an Agreement to Sell?
An agreement to sell is a legal document that outlines the terms and conditions of the sale of an immovable property between the buyer and seller. This document is signed before the sale deed and includes details such as the price of the property, payment schedule, possession date, and other terms and conditions agreed upon by both parties.
What is Stamp Duty?
Stamp duty is a tax imposed by the government on legal documents that validate any transaction or transfer of ownership of a property. The tax is usually a percentage of the property`s value and varies from state to state in India.
Stamp Duty Payable on Agreement to Sell
In many states, stamp duty is payable on the agreement to sell in addition to the stamp duty on the sale deed. The stamp duty on the agreement to sell is calculated as a percentage of the property`s value agreed upon in the agreement. The rate of stamp duty may also vary based on the state laws and regulations.
For example, if the agreement to sell is for a property worth INR 50 lakhs and the stamp duty rate for the agreement is 0.5%, then the stamp duty payable will be INR 25,000. However, if the stamp duty rate for the same agreement is 1%, then the payable stamp duty will be INR 50,000.
Stamp Duty on Agreement to Sell vs. Sale Deed
The stamp duty on the agreement to sell is usually a fraction of the stamp duty on the sale deed. The stamp duty on the sale deed is typically higher and is payable at the time of registration of the property transfer.
For instance, if the stamp duty on the sale deed in a particular state is 6%, then the stamp duty on the agreement to sell might be 0.5% or 1%. The amount paid as stamp duty on the agreement to sell is usually adjusted against the stamp duty payable on the sale deed.
Consequences of Not Paying Stamp Duty
Not paying the required stamp duty can result in legal consequences. The agreement to sell can be termed as null and void if it is not registered or stamped as per the legal requirements. Any legal action taken based on such an agreement can be challenged in a court of law.
Stamp duty is a significant expense that must be accounted for when buying or selling an immovable property. The stamp duty payable on the agreement to sell is a fraction of the stamp duty on the sale deed. The amount payable varies from state to state, and failure to pay the required amount can result in legal consequences. It is advisable to consult a legal expert or a property consultant to get a better understanding of the stamp duty payable on agreement to sell for your specific case.