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India: Changes To The Applicable Stamp Duty Basis The Karnataka Stamp (Amendment) Act, 2023

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1. INTRODUCTION

In response to longstanding stagnation, on February 03, 2024, the Karnataka state government notified the Karnataka Stamp (Amendment) Act 2023 (" Amendment Act ") 1 and brought the provisions of the Amendment Act into force. The Amendment Act modernized stamp duty rates for over 50 (fifty) legal instruments, including without limitation, power of attorney, deeds, memorandums, title agreements, conveyance, counterparts, and affidavits. Additionally, a new article has been added with respect to bank guarantees. This overdue update acknowledges the inflationary realities of our time, ensuring fairer revenue collection for the state. Below, we offer a quick summary of these refreshed rates, marking a positive step forward.

2. REVISED STAMP DUTY IN CERTAIN SECTORS

2.1 Corporate and Commercial

While analyzing revised rates on commercial agreements, we observed significant changes in the stamp duty rates. For instance, in agreements like share subscription agreement and shareholders' agreement (not explicitly covered under other Articles under the schedule i.e. covered under Article 5(j)), the stamp duty has surged by 2.5 times, from INR 200 to INR 500. Moreover, indemnity provisions (Article 29 read with Article 47(b)) now incur higher stamp duty of INR 500, notably increasing overall costs for agreements with indemnity clauses.

Further, the stamp duty on the agreement or memorandum of an agreement relating to building works or labour or services ( works contracts ), has also increased (Article 5(i-d)). For such agreements, where the amount or consideration does not exceed INR 10,00,000, the stamp duty is now INR 500, and where amounts exceed INR 10,00,000, it is INR 500 plus an additional INR 500 for every INR 10,00,000 or part thereof, capped at INR 10,00,000.

The stamp duty applicable on the articles of association of a company where the company has no share capital or nominal share capital, or increased share capital (Article 10) has risen to INR 5,000 for every INR 10,00,000 or part thereof, subject to a maximum of INR 1,00,00,000. Also, the stamp duty on a letter of allotment of shares or in respect of any loan to be raised by any company (Article 31) has increased from INR 1 to INR 10.

2.2 Mergers or Re-constitution

The stamp duty applicable to the merger, re-construction or de-merger of a company, pursuant to an order made by the High Court or National Company Law Tribunal has notably risen. It is now determined as the higher of, either (i) 5% of the market value of the property of the transferor company located in Karnataka, or (ii) 5% of the aggregate value of shares allotted (Article 20(4)). This increase may lead to forum shopping, with parties potentially relocating registered offices outside Karnataka, even if the cap remains unchanged at INR 25,00,00,000.

Furthermore, upon the reconstitution of a partnership, (a) if the partners had contributed immovable property as their share, and such property remains with the firm when the partner exits, the stamp duty payable has risen to 5% on the market value of the immovable property retained with the firm, up from the previous 3%, and (b) in any other case, from INR 1,000 to INR 2,000 (Article 40(B)).

2.3 Banking and Financial Institutions and their forever collaterals

A new entry i.e., Article 56, has been added by the Amendment Act which provides for the stamp duty payable on bank guarantees. Now, when it comes to agreements, whether paper or e-bank guarantees, stamp duty has clear rates: INR 300 for paper bank guarantees and INR 200 for e-bank guarantees.

What may need all of us to brace for impact though is the revised stamp duty rates on collaterals. Stamp duty for agreements relating to depositing title deeds, pawn or pledge as security for loans sees a significant bump from 0.1% to 0.5%, capped at INR 500 for loans under INR 10,00,000 (Article 6(2)(i)). And for loans exceeding INR 10,00,000, the erstwhile cap of INR 10,00,000 is gone and now stands replaced with a flat 0.5% rate. This change promises to reshape debt transactions, boosting state revenue by a large margin.

Moreover, security bond or mortgage-deed, now have revised stamp duty rates. For amounts under INR 1,000, it's INR 2 for every INR 100 or part thereof; for larger sums, a fixed rate of INR 500 applies (Article 47). These adjustments signal a dynamic shift in stamp duty regulations, with far-reaching implications for financial and property transactions alike.

Even stamp duty on conveyance, if relating to assignment of receivables by the originator to the special purpose vehicle, in the process of securitization under securitisation and reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, has been revised to INR 2 for every INR 1,000 or part thereof, subject to maximum INR 5,00,000 (Article 20(6)).

2.3 Miscellaneous Legal Instruments

The Stamp duty on affidavits has seen a 5x increase from INR 20 to INR 100 (Article 4), whereas on counterparts the same has been increased from INR 500 to INR 1,000 (Article 22(b)). Additionally, the stamp duty on the power of attorneys have mostly moved from INR 100 to INR 500 ( except where the power of attorney holders are more than 5, the same has been increased from INR 200 to INR 1,000 ) (Article 41). While the agreements pertaining to purchase or sale of a government security continues to be stamped at a rate of 0.01%, the erstwhile cap of INR 1,000 on such agreements has been done away with (Article 5(b)).

Another crucial stamp duty change is in Article 5(e)(ii), for agreements pertaining to sale of immovable property without delivery of possession, wherein the erstwhile cap of INR 20,000 has been removed.

The stamp duty payable on an arbitration award in relation to movable property has also been increased to 1% of the amount or market value of the movable property (Article 11(b)). This is significantly higher as compared to the stamp duty of INR 500 payable on arbitration awards in Maharashtra, and as a result, this change may disincentivize parties to conduct arbitration in Karnataka.

Further, conveyance relating to transferable development rights is proposed to be stamped at 5% on the market value of transferable development rights or consideration, whichever is higher (Article 20(7)).

3. QUICK VIEW

These stamp duty hikes will have ripple effect on various transactions involving the subject matter of the instruments. Given that, many other states are yet to revise their stamp duty rates from the stagnated ones that have been applicable for years, these increased rates may make stamping agreements in Karnataka comparably more expensive, and as a result may contribute to higher operational costs for businesses located here. Higher stamp duty rates may influence economic activities leading to businesses and individuals alike assessing the financial implications of various transactions, and investment decisions. As mentioned above, the increased stamp duty rates may potentially result in businesses choosing place of arbitration and housing registered offices, outside the state of Karnataka, owing to the increased merger or arbitrations costs, respectively.

It's crucial to recognize that consequences of these revised rates (including potential decisions for stamping instrument in Karnataka versus in other states) will vary depending on transaction nuances. Parties involved should be mindful of revised stamp duty rates to avoid legal complications, as insufficiently stamped documents risk inadmissibility in court, necessitating payment of dues and penalties upon impounding.

Despite the business impact, one cannot ignore the silver lining in all this which is the revenue boost for the government. The increased stamp duty will help the Karnataka government leverage the same for enhanced revenue streams, funneling funds into public services and state initiatives. This serves as a ray of hope, illuminating avenues for improved community welfare and infrastructure development, as a result of the revisions in the rates, which were long overdue.

1. https://erajyapatra.karnataka.gov.in/(S(ag0jpajup0pec3lvtatcaese))/WriteReadData/2024/6828.pdf .

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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stamp duty for assignment deed in karnataka

Welcome to Proplegal.

Proplegal

The Karnataka Stamp Act: A Comprehensive Guide for Individuals and Businesses

Introduction to Karnataka Stamp Act

The Karnataka Stamp Act is a crucial legislation that governs the levying of stamp duty on various instruments, documents, and transactions in the state of Karnataka, India. Understanding the intricacies of this act is essential for individuals and businesses alike, as it affects a wide range of legal, financial, and real estate matters. In this comprehensive guide, we will delve into the Karnataka Stamp Act, exploring its key provisions, stamp duty rates, exemptions, and procedures. So, let’s embark on this journey to unravel the mysteries of the Karnataka Stamp Act.

What is the Karnataka Stamp Act? The Karnataka Stamp Act, enacted in 1957, is a legal framework that outlines the rules and regulations related to stamp duty in the state of Karnataka. Stamp duty is a type of tax imposed on various documents to make them legally enforceable. It acts as evidence that a transaction has taken place, and the payment of stamp duty gives legal validity and authenticity to the document.

Key Provisions of the Karnataka Stamp Act 2.1 Chargeability of Stamp Duty

The Karnataka Stamp Act imposes stamp duty on a wide range of instruments, including agreements, conveyances, lease deeds, mortgage deeds, bonds, and more. The stamp duty is generally calculated as a percentage of the transaction value or the market value of the property involved.

2.2 Determining Stamp Duty Rates

The stamp duty rates vary depending on the type of instrument and the transaction involved. The Karnataka State Government periodically revises these rates. The stamp duty rates for property transactions, for instance, may vary based on factors such as property type, location, and transaction value.

Stamp Duty on Property Transactions 3.1 Sale and Purchase Deeds

When buying or selling a property in Karnataka, a sale or purchase deed must be executed. The Karnataka Stamp Act mandates that these deeds be properly stamped to make them legally valid. The stamp duty for sale and purchase deeds is typically based on the market value or the transaction value, whichever is higher.

3.2 Lease and Rental Agreements

Lease and rental agreements for commercial or residential properties also attract stamp duty. The stamp duty for such agreements is generally a percentage of the average annual rent or the total rent payable over the lease period.

3.3 Gift Deeds and Transfer of Property

Gift deeds, which involve the transfer of property without any monetary consideration, also require payment of stamp duty. The stamp duty for gift deeds is often calculated based on the market value of the property being gifted.

Stamp Duty on Loan and Mortgage Documents Loan agreements and mortgage deeds, executed for the purpose of securing a loan against property, are subject to stamp duty under the Karnataka Stamp Act. The stamp duty for these instruments is typically calculated based on the loan amount or the amount secured by the mortgage.

Exemptions and Concessions The Karnataka Stamp Act provides certain exemptions and concessions for specific transactions. For instance, stamp duty is exempted on instruments executed by or in favor of the Central or State Government. In addition, certain documents related to agricultural land, charitable institutions, and educational institutions may also be eligible for concessions or exemptions.

Stamp Duty Payment and Registration To ensure the legality and enforceability of a document, it must be properly stamped and registered as per the Karnataka Stamp Act. Stamp duty payment and document registration can be done at the jurisdictional Sub-Registrar’s Office. Non-payment or underpayment of stamp duty can lead to penalties and may render the document invalid.

Enforcement and Penalties The Karnataka Stamp Act empowers the authorities to enforce compliance with stamp duty regulations. Failure to pay the appropriate stamp duty can result in penalties, fines, or even legal repercussions. It is important to understand the stamp duty provisions and ensure compliance to avoid any future disputes or legal complications.

The Karnataka Stamp Act plays a vital role in regulating the payment of stamp duty on various instruments, documents, and transactions within the state. This comprehensive guide has shed light on the key provisions of the act, stamp duty rates, exemptions, and procedures involved in stamp duty payment and document registration. By familiarizing yourself with the Karnataka Stamp Act, you can ensure compliance with the law and make informed decisions related to property transactions, financial agreements, and other legal matters in Karnataka. Remember, seeking professional advice from legal experts is always advisable for complex transactions or specific circumstances.

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Home » Property Trends » Stamp duty in Bangalore in 2024

Stamp duty in Bangalore in 2024

stamp duty for assignment deed in karnataka

Stamp duty is the legal fee that a buyer pays to the sub-registrar of the area to get a property registered in government records. How much money you will have to pay as stamp duty and registration charge in Karnataka in 2024 if you are buying a property in cities like Bangalore?

Table of Contents

Stamp duty for men in Bangalore/ Karnataka 2024

Stamp duty for women in bangalore/karnataka 2024, registration charges for men/women in bangalore/ karnataka 2024.

See also: All about gift deed stamp duty

Surcharge on stamp duty in Bangalore

Besides stamp duty in Karnataka, you will have to reserve a budget for the cess and surcharge as part of the property registration charges in Bangalore and other cities within the state . For properties priced above Rs 35 lakh, a cess of 10% and a surcharge of 2% are applicable. This is in the case of urban areas. So, effectively, you will be paying 5.6% as stamp duty. In the case of rural areas, a home buyer pays 5.65% as the stamp duty, because the surcharge is 3%.

See also: All you need to know about Kaveri Online Services

Stamp duty on other legal instruments in Bangalore, Karnataka

In a move that would substantially increase the cost of document registration in the state, the Karnataka government on December 11, 2023, passed a bill to hike stamp duties on various instruments of property transfer. After being tabled in the State Assembly on December 7, the Karnataka Stamp (Amendment) Bill, 2023, which aims to hike stamp duty in the state was passed on December 11.

Stamp duty in Karnataka after December 11, 2023, revision

Adoption deed.

Now, stamp duty on adoption deeds will go up from Rs 500 to Rs 1,000.

Stamp duty on affidavits will rise from Rs 20 and up to Rs 100.

Powers of attorney

Stamp duty on powers of attorney hiked from Rs 100 to Rs 500. When more than five but not more than 10 people are authorised by the PoA, stamp duty will be Rs 1,000 in place of the earlier Rs 200.

Divorce papers

Stamp duty on divorce papers will go up from Rs 100 to Rs 500.

Certified copies

For certified copies, stamp duty will increase from Rs 5 to Rs 20.

Stamp duty on registering trusts will be increased to Rs 2,000 from the existing Rs 1,000.

Conveyance deed of amalgamation of companies

For conveyance deed s involving amalgamation of companies, stamp duty has been hiked to 5% from 3%.

Property partitions converted for non-agricultural purposes

Stamp duty for property partition s converted for non-agricultural purposes will increase from Rs 1,000 per share to Rs 5,000 per share in urban areas.

Stamp duty for property partitions converted for non-agricultural purposes will increase from Rs 500 per share to Rs 3,000 per share in gram panchayats.

Stamp duty for agriculture property partition will increase from Rs 250 per share to Rs 1,000 per share in gram panchayats.

Stamp duty on commercial property in Bangalore

To register commercial property— which includes business establishments and office spaces, including hospitals/private schools and colleges—the following stamp duty must be paid:

Stamp duty: 5% on the market value or consideration amount whichever is higher

Cess: 10% on the stamp duty

Surcharge: If the property comes under the urban zone, 2% on stamp duty.

If the property comes under the rural zone, 3% on stamp duty.

Registration fee: 1% on the market value or consideration amount whichever is higher.

Stamp duty on industrial property in Bangalore

To register industrial property — properties used for the establishment of factories and industries—the following stamp duty must be paid:

Stamp duty: 5% on the market value or consideration amount whichever is higher.

Cess: 10% on the stamp duty.

Surcharge: 2% of stamp duty if the property comes under urban zone.

3% of the stamp duty if the property comes under the rural zone.

Registration fee: 1% on the market value or the consideration amount, whichever is higher.  

Stamp duty in Karnataka before the December 11, 2023, revision

How to calculate bangalore stamp duty.

Step 1: Simply log on to the Kaveri Online Services website or click here to be directed to the page.

Step 2: The Karnataka stamp duty calculator has certain prerequisites. Fill in the nature of the document and proceed. In this case, we have selected ‘sale of flat’ as the nature of the document.

Stamp duty and registration charges in Bangalore

Step 3: You will be asked to fill in property details such as region type – whether BBMP, city corporation, municipal corporation, town panchayat, gram panchayat, or others. You can choose this from the drop-down menu.

Other details to be included are the indicative market value and the indicative consideration amount. What is the indicative consideration amount? To arrive at the stamp duty rates and charges , the market value is the value as worked out as per the consideration (or ready reckoner, or stamp duty) mentioned in the document, whichever is higher. If the consideration value is higher, this will be taken into account to calculate stamp duty.

If you are unaware of the market value, you can also calculate it at this stage using the calculator provided. Simply click on ‘Calculate market value’ to proceed.

Once you have filled in the details, the calculator will show you the indicative stamp duty charges, surcharge, cess, total stamp duty and total registration fees for your property.

See also: All about IGR Maharashtra online search

Stamp duty and registration charges in Bangalore

See also: All about Karnataka Bhoomi RTC Portal

Type of property and area taken into consideration to calculate stamp duty

Also read all about Karnataka’s Rajiv Gandhi Vasati Yojana

Factors involved in stamp duty charges

Note that there are many factors that determine stamp duty charges. These also impact the house or flat registration charges in Bangalore and other cities, which homebuyers need to consider.

Formula to calculate stamp duty

The formula to calculate the stamp duty on your property is:

Stamp duty = (Property value/100) x stamp duty rate

Depending on the property value, you have to calculate the stamp duty by taking out the applicable percentage. If the property value if Rs 50 lakh, for instance, the applicable stamp duty would be 5% of the Rs 50 lakh. This way, the buyer will have to shell out Rs 2.5 lakh stamp duty.

If the same property fell is being registered in the name of a woman, the applicable stamp duty would be 3%. Then, the buyer will have to pay Rs 1.50 lakh as stamp duty.

Who pays stamp duty, the buyer or seller?

Starting July 1980, the buyer must pay stamp duty on the market value of the immovable property.

Which cities have high stamp duty rates?

Chennai, Kerala and Hyderabad are among cities that have a high stamp duty, in the range of 7% to 9%.

How much is the BBMP & Corporation added surcharges?

It comes to 2% on stamp duty.

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sunita mishra

An alumna of the Indian Institute of Mass Communication, Dhenkanal, Sunita Mishra brings over 16 years of expertise to the fields of legal matters, financial insights, and property market trends. Recognised for her ability to elucidate complex topics, her articles serve as a go-to resource for home buyers navigating intricate subjects. Through her extensive career, she has been associated with esteemed organisations like the Financial Express, Hindustan Times, Network18, All India Radio, and Business Standard.

In addition to her professional accomplishments, Sunita holds an MA degree in Sanskrit, with a specialisation in Indian Philosophy, from Delhi University. Outside of her work schedule, she likes to unwind by practising Yoga, and pursues her passion for travel. [email protected]

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  1. Stamp Duty and Registration Fees - Department of Stamps and ...

    Agreement relating to Deposit of Title Deeds (D.T.D) 0.1% Min. 500, Max.50,000. 0.1% Min 100 Max.10,000. 5. Cancellation of Instruments a) Cancellation of any instrument previously executed on which stamp duty has been paid as per any article of the schedule. Same duty as on the original instrument

  2. Changes To The Applicable Stamp Duty Basis The Karnataka ...

    What may need all of us to brace for impact though is the revised stamp duty rates on collaterals. Stamp duty for agreements relating to depositing title deeds, pawn or pledge as security for loans sees a significant bump from 0.1% to 0.5%, capped at INR 500 for loans under INR 10,00,000 (Article 6(2)(i)).

  3. TABLE OF CONTENTS PARAGRAPH SUBJECT PAGE NO CHAPTER I ...

    CHAPTER –VIII INSTRUMENTS UNDER THE KARNATAKA STAMP ACT AQMF: III-Audit Management. QME: N. Conducting of Audit. KIE: Article5e(i),5e(ii),5(f),6,14,20,26,28,30,32A,34,41,45,48 of Karnataka Stamp Act 1957. Stamp duty is payable on instruments mentioned in the Schedule to the Karnataka Stamp Act, 1957.

  4. Stamp Duty in Karnataka and Registration Charges 2024

    In the case of Karnataka, if a sales deed is cancelled, property buyers can seek a refund of 98% of the paid stamp duty by submitting a refund application. However, to initiate the refund stamp duty in Karnataka process, it is essential to submit the original agreement, the original cancellation deed, and the application.

  5. The Karnataka Stamp Act: A Comprehensive Guide for ...

    The Karnataka Stamp Act, enacted in 1957, is a legal framework that outlines the rules and regulations related to stamp duty in the state of Karnataka. Stamp duty is a type of tax imposed on various documents to make them legally enforceable. It acts as evidence that a transaction has taken place, and the payment of stamp duty gives legal ...

  6. Revised Stamp Duty, Registration Fee in Bangalore 2024

    Stamp duty in Karnataka after December 11, 2023, revision Adoption deed. Now, stamp duty on adoption deeds will go up from Rs 500 to Rs 1,000. Affidavits. Stamp duty on affidavits will rise from Rs 20 and up to Rs 100. Powers of attorney. Stamp duty on powers of attorney hiked from Rs 100 to Rs 500. When more than five but not more than 10 ...

  7. Kaveri Online Services

    Kaveri 2.0 Online service is a web based application of Department of Stamps & Registration, Government of Karnataka which provides interface to the citizen required for document & marriage registration.

  8. Changes to the applicable stamp duty basis the karnataka ...

    Stamp duty for agreements relating to depositing title deeds, pawn or pledge as security for loans sees a significant bump from 0.1% to 0.5%, capped at INR 500 for loans under INR 10,00,000 ...

  9. THE KARNATAKA STAMP ACT, 1957

    April 1958, the rates of Stamp Duty should be expressed in decimal coinage. The new rates of non-postal stamps decided upon by the Government of India are in multiples of 5 Naye Paise. It has become necessary, therefore, to amend the Mysore Stamp Act, 1957, to adapt the rates of Stamp Duty decided upon by the Government of India.