Stamp duty is a tax levied by state governments on the execution of legal instruments, most commonly on documents recording the transfer of immovable property. Under Indian law, stamp duty is governed by Section 3 of the Indian Stamp Act, 1899, which provides that every instrument specified in Schedule I of the Act shall be chargeable with duty at the rate prescribed therein or by the relevant state legislation.
Legal definition
The Indian Stamp Act, 1899 establishes the framework for stamp duty through several key provisions:
Section 3 — Instruments chargeable with duty: Every instrument mentioned in Schedule I of this Act, which, not having been previously executed by any person, is executed in India on or after the first day of July, 1899, shall be chargeable with duty of the amount indicated in that Schedule.
The Act does not define "stamp duty" as a standalone term. Instead, it defines the related concept of "duly stamped":
Section 2(11) — "Duly stamped": An instrument is said to be "duly stamped" if it bears an adhesive or impressed stamp of not less than the proper amount and such stamp has been affixed or used in accordance with the law for the time being in force in India.
Section 2(10) defines "conveyance" to include a conveyance on sale and every instrument by which property, whether movable or immovable, is transferred inter vivos. This definition is critical because conveyances attract the highest stamp duty rates in Schedule I.
Stamp duty falls under Entry 63 of the State List (List II) of the Seventh Schedule to the Constitution of India. Consequently, while the Indian Stamp Act, 1899 provides the central framework, individual states have the power to prescribe their own stamp duty rates, and many states have enacted their own stamp legislation (for instance, the Maharashtra Stamp Act, 1958).
How courts have interpreted this term
Hindustan Lever Ltd. v. State of Maharashtra [AIR 2004 SC 326]
The Supreme Court held that a court order sanctioning a scheme of amalgamation under the Companies Act constitutes an "instrument" within the meaning of the Stamp Act and is therefore exigible to stamp duty as a conveyance under Section 3. This judgment significantly expanded the scope of what transactions attract stamp duty, establishing that even court-sanctioned transfers of property — not just voluntarily executed documents — fall within the charging provision.
Chief Controlling Revenue Authority v. P. Babu [2025 INSC 1]
In this recent judgment, the Supreme Court clarified that under Section 47-A of the Indian Stamp Act, registering officers cannot mechanically refer documents for higher valuation. They must record valid, specific reasons for believing that the market value stated in the instrument is below the true market value. This ruling strengthened procedural fairness in stamp duty assessments and curbed arbitrary references that caused delays in property registration.
Chief Controlling Revenue Authority v. Coastal Gujarat Power Ltd. [(2016) 3 SCC 358]
The Supreme Court held that an instrument must be read as a whole to determine the nature of the transaction for stamp duty purposes. The character of the instrument is determined by its substance, not by its label or title. This principle prevents parties from artificially structuring documents to attract a lower rate of stamp duty.
Types of stamp duty
Indian stamp legislation distinguishes between several categories based on the type of instrument:
- Conveyance stamp duty: Levied on sale deeds, gift deeds, and other instruments transferring property. This attracts the highest rates, typically 3-8% of the property's market value depending on the state.
- Agreement stamp duty: Levied on agreements to sell, lease agreements, and partnership deeds. Rates are generally lower than conveyance duty, often 0.1-2%.
- Mortgage stamp duty: Levied on mortgage deeds. Rates vary based on whether the mortgage is with or without possession, typically 1-5%.
- Power of attorney stamp duty: Levied on powers of attorney relating to immovable property. Rates have been increased in several states following the Suraj Lamp judgment to discourage GPA-based property transfers.
Why this matters
Stamp duty is a significant transaction cost in every property purchase in India. Combined with registration charges, stamp duty can add 4-10% to the cost of acquiring property, making it the single largest incidental expense in a real estate transaction. For a property valued at Rs 1 crore, stamp duty and registration charges can range from Rs 4 lakh to Rs 10 lakh depending on the state.
For property buyers and practitioners, understanding stamp duty is essential because an insufficiently stamped document is inadmissible as evidence in any court or legal proceeding under Section 35 of the Indian Stamp Act. This means that if a sale deed is not properly stamped, the buyer cannot rely on it to prove ownership, even if the deed is otherwise validly executed and registered. The remedy is to get the instrument impounded and pay the deficit duty along with a penalty, but this can be costly and time-consuming.
State-wise rates vary considerably. As of 2025-26, Maharashtra charges 5-6% (with women buyers eligible for a 1% concession), Delhi charges 4-6% (with a 2% concession for women), Karnataka charges 5% uniformly (with a 2% surcharge for properties above Rs 45 lakh in Bengaluru), and Rajasthan charges 4-6%. Several states offer reduced rates for first-time buyers, women buyers, and properties in developing areas. Practitioners must verify the applicable rate in the relevant state at the time of the transaction, as rates change frequently through state government notifications.
Related terms
Broader concepts:
Related instruments:
Related concepts:
Frequently asked questions
Who pays stamp duty on a sale deed — the buyer or the seller?
In most Indian states, stamp duty on a sale deed is payable by the buyer (transferee). However, the parties may contractually agree to share the cost. Under Section 29 of the Indian Stamp Act, in the absence of any agreement, the expense of providing proper stamps falls on the person drawing, making, or executing the instrument. For conveyances on sale, customary practice across India places this obligation on the buyer.
What happens if stamp duty is not paid or is underpaid?
An instrument that is not duly stamped is inadmissible as evidence in any court or before any public authority under Section 35 of the Indian Stamp Act. If such a document is presented, the authority must impound it under Section 33 and refer it for adjudication. The party must then pay the deficit stamp duty along with a penalty of up to 10 times the deficiency (capped differently in various states). Only after the deficit and penalty are paid can the instrument be admitted as evidence.
Is stamp duty refundable if a property transaction is cancelled?
Stamp duty is generally non-refundable once paid. However, Section 54 of the Indian Stamp Act provides for a refund if the instrument is not used for the intended purpose, provided the application is made within six months of the instrument's execution. Some states have extended this period or provided additional refund provisions in their state stamp legislation. In practice, obtaining a stamp duty refund can be procedurally difficult.
Are there stamp duty concessions for women buyers in India?
Yes. Several states offer reduced stamp duty rates for women buyers to encourage female property ownership. Delhi offers a 2% concession (4% for women vs 6% for men), Maharashtra offers a 1% concession, and states like Rajasthan, Haryana, and Karnataka also provide reduced rates for women. These concessions apply when the property is registered solely or jointly in a woman's name.
This entry is part of the Veritect Indian Legal Glossary, a comprehensive reference of Indian legal terminology grounded in statutory text and judicial interpretation.
Last updated: 2026-03-27. Veritect provides this content for informational purposes and does not constitute legal advice.