To give rent agreements legal validity, you must register the rental agreement stamp paper by completing the proper procedures and paying the required fees. You must also pay rent agreement stamp duty to register it. Although both rent and lease are two different terminologies, the stamp duty fee required for both is the same.
In this article, let’s get to know why registering a rent agreement is important, the determining factors of rental agreement stamp duty value, accepted payment modes, and more.
A legally binding rental agreement is essential for a harmonious landlord-tenant relationship. It not only strengthens the bond between both parties but also safeguards their rights. It also notifies others about the property’s ownership. Contrary to this, an oral agreement between the landlord and the tenant is not legally binding and is considered null and void. So, in the case of any rental property, a written agreement is inevitable.
Another important advantage of registering a rent agreement is that it serves as legal proof and can safeguard the landlord in future legal issues. When a large asset like a residential property is involved, the landlord requires a document that can offer legal protection in a future disagreement or resistance from the other party.
The owner needs to register the agreement if the rent term has exceeded 12 months. In fact, in such cases, it is mandatory for both the tenant and the owner to visit their nearest sub-registrar office in the rented property’s state or district. Both the parties are required to reach the office with two witnesses each to register themselves. But if any of the parties isn’t available, they might as well sign the POA and give the right to the agent to sign the agreement on their behalf.
Stamp duty is supposed to be paid as per the stamp laws specified by the State Government. As per the Constitution of India, a stamp duty levied on a property is entirely a ‘State Issue’, and thus stamp duty on lease agreements varies from one state to another.
Stamp duty, in general, is dependent on various factors, including contract term, rental amount, premium, in addition to other sorts of premium specified in the lease agreement. Certain state governments have specified their circle rates.
So, you will either find the amount of rent or the minimum circle rate specified in the agreement. Whichever out of the two comes out to be higher is required to be paid as rent agreement stamp duty.
Four vital factors are taken into consideration to determine a rental agreement. These include:
You might consider the rent and lease agreement the same thing, but there is a fine difference between the two. It is important to understand the key difference to get the best possible real estate deal.
The primary variation between rental and lease agreements is the time frame they cover. A rental agreement covers a short period of time, typically up to 30 days. On the other hand, a lease agreement tends to cover longer time periods, typically 12 months or more.
However, the subtle difference between these two agreements does not reflect on stamp duty charges. Therefore, both lease and rental agreement stamp paper values remain the same.
The below-depicted table represents the value of stamp paper levied in lease and rent agreements across different states in India:
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