Stamp duty is a tax, similar to income tax and sales tax, collected by the government. The stamp duty is paid by the buyer of the property. It is payable on the market value of the property or agreement value, whichever is higher.

The purchase agreement of a property does not become legal until it is executed by the government, for which you need to pay the stamp duty. Also, only instruments that are properly stamped can be admitted as evidence in court.

Is fixed by the government and varies from locality. It is the minimal amount property must be valued at and is calculated per sq. feet.

The government assesses the market value of property every year, and the revised rate, fixed by the state government and published in the Ready Reckoner, has been applicable since Jan 1, 2007.

Stamp Duty assessments are also made on the basis of the Ready Reckoner with builder and property brokers using it to peg prices.

It is payable before or on the day of execution of the document, or on the next working day.

If there is a delay in payment, it attracts penalty at the rate of two per cent a month on the deficit amount of the stamp duty. The maximum penalty is 200 per cent of the deficit amount of stamp duty.

Many people are under the impression that some consultants can help them in reducing the stamp duty. We would like to warm them that this can be done only by furnishing misleading information like lesser area of premises or flat, longer age of building and a building with a lift as not having a lift.

This would prove to be very detrimental and harmful when, in future, they receive a notice from the department for under valuation due to concealment of facts. Even a registered document can be reopened anytime within ten years from the date of registration and adjudicated documents within six years from the date of adjudication. Please note that writing misleading information in the agreement is an offence under the Stamp Act, which is punishable with fine and imprisonment.