New stamp duty rates of Leave and License agreements w.e.f 1st May 2013

The new stamp duty rates for leave and license agreements will be applicable from 1st May 2013. Have the rates gone up? If your total rental income is below 5-7 Lac levels (approximately, see comparison below) the stamp duty has actually dropped!  The authorities have tried to rationalise the stamp duty rates which is only fair. Earlier you paid a maximum of Rs.5,000/year  as stamp duty for residential properties. Now, that changes, the more you earn the higher the stamp duty. Here’s the new clause:

New Stamp duty rates Leave and License 1 May 2013

Here’s how you compute the new stamp duty rates:

  1. Monthly rental x no. of months = A
  2. Advance rent for the period = B
  3. 10% of Refundable Deposit x no of years of the agreement = C
  4. Total taxable amount D = A+B+C
  5. Stamp Duty E = 0.25% x D

So what’s the difference between the old and new stamp duty rates? The earlier schedule was:

Stamp Duty rates for leave and license 2011

Here’s a comparison chart between the old and new rates for an agreement period of 12 months across 5 scenarios. 

Comparison_old_and_new_rates800

So, do you think that the rationalisation of the stamp duty is fair? Look forward to your comments. 

Disclaimer: The author of the post has no authority on any property or tax matters whatsoever and has made calculations based on his understanding of the duty. Please take guidance from the appropriate authority for your personal calculations. 

22 thoughts on “New stamp duty rates of Leave and License agreements w.e.f 1st May 2013

  1. Hi Raj, in your initial explanation on how to compute the new stamp duty rates, you have mentioned total taxable amount as A+B+C, which includes the advance rent/security deposit.
    However, in the comparison chart between the old and new rates, you have not included advance rent/security deposit while computing the taxable amount under “NOW” section. Request you to clarify the correct interpretation. Thanks in advance.

    1. Hi Anand,

      Thanks for your comments.
      In the new computation, only advance rent (or non refundable deposit) is calculated and just to ensure parity between the examples, none of them have an element of advance rent. Hence the current illustration is correct.

      1. Hi Raj,
        Can you help me as in one case the License fee is Rs. 100,000/= per month payable quarterly, deposit is Rs. 300,000/=, period is 3 years, and the license fee for the first two quarters will be paid in advance to allow the licensor to get some work done.what should be the stampduty payable?
        Regards,
        Avinash Mordani

        1. Hi Avinash,

          It will be Rs.10,750/- according to my calculation assuming the 6 Lacs receipt for advance rent will be attached in the agreement along with the refundable deposit.

  2. Hi Raj.. Really a good article..I have one query..If i have monthly rent of Rs.15,000 for 11 months & Refundable Security Deposit of Rs.1,00,000/-. Therefore, as per your calculation, total taxable amount will be Rs.1,75,000/- & stamp duty at the rate of 0.25% on that will be Rs.437.50.

    However, when i asked many brokers, they gave me a calculation as follows:
    They included the full amount of deposit in total taxable amount. Therefore, total taxable amount became Rs.2,65,000/-. & Hence, stamp duty is Rs.662.50.

    Please clarify..What is correct?

  3. If the licensed period does not comprise the complete year e.g. L&L agreement is entered for say 28 months…in that case are we supposed to consider 10% of refundable security for three years or is there a way to consider it for exact 28 months. In few high stake agreements SD may be a very high amount…

    1. Hi Gopal,

      Technically the deposit is to be calculated for 28 months but at the registrar they tend to round it off to 3 years. This formula ensures the government earns more money on high value transactions and I think that’s fair.

  4. Thanks Very precise and clear information,but my agent is demanding 5000 to get the same done. My rent is 20k and deposit is 2l, which roughly works out to approx 700 for 11 months. Are there any other charges involved in registration, and is there any way to get it done online…
    Thanking you in advance…
    Regards,
    Rupesh Ganguly

    1. Hi Rupesh,

      Apart from the stamp duty, you have to pay Rs.1,000 to the sub registrar as fees towards registration of the document. The agent would be charging you his fees for helping you with the entire process of registration.

      You can pay stamp duty and registration online but the total amount needs to be above Rs.5,000.

  5. Raj,, its nrealy a nice article. n the best is this is interactive forum where discussions r doubts and raised an a solution is being attempted logically n practically…

  6. Hi. I need your help with this calculation. Monthly rent- 30,000. Deposit- 150,000. Tenure- 2 years. As per my calculation, stamp duty would be 1875. Is my calculation correct? My rent payment date is 5th of every month.

  7. Hi All,

    Please help. My rent is 23k with lease agreement of 11 month and 80k as deposit. My broker is asking me for registration charge of 3500. Is that fair? Please reply as I have to go to registrar office tomorrow.

  8. Very good Article, But hardly any agents atleast in Mumbai use the above calculation or seek money according to the above calcualtion.

  9. We intend to take a premises for 9 years on Leave and License Basis. So, Can we execute Two agreement one is for 5years and other for 4years.

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