Maharashtra Stamp Act: An overview of stamp duty on immovable property

Whenever any movable or immovable asset changes hands, the buyer has to pay a certain amount of tax to the state government, to get it stamped, which is known as stamp duty. The Maharashtra Stamp Act specifies such assets and instruments on which the stamp duty has to be paid to the state government. The Act also details the amount of duty to be paid to the government.

After announcing a massive stamp duty rate cut in August 2020, the state government has decided not to extend the stamp duty waiver on property registrations beyond March 31, 2021 and also kept the Ready Reckoner Rates unchanged for the financial year 2021-22. According to the announcement made by the state government in August 2020, the stamp duty payable on property transactions was reduced in two slabs – by 3% from September 1, 2020 to December 31, 2020 and by 2% from January 1, 2021 to March 31, 2021.

Earlier, The Maharashtra government, in its budget for 2021-22, announced a concession of 1% over the prevailing stamp duty rate on property transactions, if the transfer of house property or registration of sale deed, is done in the name of women. The announcement was made by deputy chief minister Ajit Pawar, on March 8, 2021.

What is Maharashtra Stamp Act?

The Maharashtra Stamp Act was passed in 1958 and applies to all the instruments mentioned in Schedule 1, on which the stamp duty is payable to the state. The Act was amended recently and the amendments include a revision of stamp duty on gift deeds, inclusion of e-payment of stamp duty, revision of penalty clauses and increment of stamp duty under certain instrument clauses.

Stamp duty charges in Maharashtra

Stamp duty rates on property depend upon several criteria across Maharashtra state. This includes whether the property is located in urban or rural areas, total cost of the transaction, etc. Earlier in April 2020, the Maharashtra government has reduced stamp duty on properties for the next two years, in the areas falling under the Mumbai Metropolitan Region Development Authority (MMRDA) and municipal corporations of Pune, Pimpri-Chinchwad and Nagpur. This means that stamp duty on properties in Mumbai, Pune and Nagpur, was charged at 5% (4% stamp duty + 1% metro cess).

The registration charges in the state are 1% of the total cost, for the properties priced below Rs 30 lakhs and capped at Rs 30,000 for properties priced above Rs 30 lakhs.

Also, according to Article 34 of the Maharashtra Stamp Act, which was amended in 2017, stamp duty on gift deeds is 3% of the property’s value. However, if the property in consideration is a residential or agricultural property and is gifted (without any payment) to family members, then, the stamp duty is Rs 200.

How is stamp duty calculated?

Stamp duty is calculated on the basis of ready reckoner rates and the property value mentioned in the buyer-seller agreement. In Maharashtra, the stamp duty on property varies as per the location. For instance, stamp duty for a property located in the municipal limit of urban areas in Mumbai will be 5% of the market value, while a property located within the limits of any gram panchayat will attract stamp duty of 3% of the market value.

Stamp duty in Mumbai

Stamp duty in Mumbai varies across the region, depending upon the property location and type of deed.

Below is the stamp duty applicable on conveyance/sale deed after March 2021:

Payment of stamp duty

According to the Maharashtra Stamp Act, all instruments chargeable with duty and executed in Maharashtra, should be stamped before or at the time of execution, or on the next working day following the date of execution. However, if the deed is executed out of the territory, it can be stamped within three months after it is first received in India.

The stamp papers must be in the name of one of the parties to the transaction and not in the name of the chartered accountant or lawyer of the parties. Moreover, the date of issue of the stamp paper must not be more than six months older than the date of the transaction.

Stamp duty charges can be paid by way of adhesive or impressed stamps on the deed. In addition to this, the adhesive stamps used on the deed is cancelled at the time of execution, so that it is not available for reuse.

Online payment of stamp duty

The Maharashtra Stamp Act has been amended to accept online payment, for stamp duty payable on instruments executed in the state. Follow these steps, to pay your stamp duty online:

Step 1: Visit the Maharashtra Stamp Duty online payment portal.

Step 2: Click ‘Pay Without Registration’ if you are not registered with the portal. If you are a registered user, fill in the login details.

Step 3: If you have selected the ‘Pay Without Registration’ option, you will be redirected to another page, where you have to choose ‘Citizen’ and select the type of transaction you want to do.

Step 4: Choose ‘Make Payment to Register your Document’. Now, you can opt for paying the stamp duty and registration charges together, or stamp duty only, or registration charges only.

Step 5: Fill in the details as required such as district, sub-registrar’s office, payment details, party details, property details and property value details.

Step 6: Choose the payment option and once done, generate the challan, which has to be presented at the time of execution of the deed.

If you are stuck at any step or you want to generate your challan again, you can drop a mail to vtodat.mum-mh@gov.in

Stamp duty offers in Maharashtra 

To boost sales during the festive season of Gudi Padwa and Akshaya Tritiya, a number of developers have announced slew of new offers and discounts. This also includes a discount on stamp duty and registration charges. Under this offer, the builders are absorbing up to 100% of the stamp duty component. This move is expected to bring the buyers back to the market who are looking for investment in real estate. Earlier, the National Real Estate Development Council (NAREDCO), Maharashtra, also announced that they would absorb the 3% stamp duty on property purchase and offer a waiver to home buyers, till December 31, 2020.

Stamp duty on past property documents

While the Maharashtra Stamp Act empowers the collector of a district, to call for documents within a period of 10 years from the registration date of such documents, to verify if the appropriate duty has been paid on the deed, the Bombay High Court has held that stamp duty cannot be collected for inadequately stamped past documents, at the time of its subsequent sale. Moreover, if the historical documents are liable to be stamped, the stamp duty shall be recovered only at the market rate prevalent when the transaction took place. That means, stamp duty charges cannot be applied on a retrospective basis.

See also: Bombay HC rules stamp duty cannot be charged for past transactions

Stamp duty on lease agreements

The state government, on December 24, 2020, announced a reduction in the stamp duty on lease agreements of immovable property. The stamp duty on lease deed has been reduced to 2% from 5%, till December 31, 2020 and to 3% from January 1, 2021 to March 31, 2021. The cut is applicable to lease agreements of over 29 years.  The cuts are in line with the earlier reduction announced in September 2020, to boost property sales.

Maharashtra stamp duty reduction impact 

The announcement of the cut in stamp duty has boosted property sales in the state, especially in Mumbai where the sales of luxury flats have skyrocketed after the announcement. According to media reports, between September 1 and October 17, 2020, high-end apartments worth Rs 2,200 crores have been registered across 25 registration offices in Mumbai. Bollywood celebrities including Hrithik Roshan, Janvi Kapoor, etc., also made their property purchase during this period and paid hefty sums as stamp duty. Some media reports also quoted that the property registrations made during September-November were the highest in comparison to the corresponding period in the past four years. Nearly eight lakh documents have been registered since the announcement, till November 2020, as per media reports.

Maharashtra reduces premium for real estate projects

On January 6, 2021, the Maharashtra government announced a 50% reduction in construction premiums. The move will promote new launches in the Mumbai Metropolitan Region (MMR), which have come to a halt due to the Coronavirus pandemic and high starting costs. The reduction will be available for builders till December 31, 2021.

“After being hit by the pandemic, the realty market has seen an uptick in the state, post the stamp duty cut by the Maharashtra government and the status quo on interest rates by RBI in the last four months. The reduction in premiums would help the Mumbai market, as the city collected as many as 22 premiums under various heads, which is higher than other top cities. High premium puts a financial burden on developers, leading to higher costs for the home buyers. In the current economic scenario, the step would ease the burden and soften prices, resulting in more sales in the coming months,” said Mani Rangarajan, group COO, Housing.com, Makaan.com and Proptiger.com.

Recent judgements on Maharashtra stamp duty

Update on February 26, 2021:

In a recent judgement, the Bombay High Court directed the Maharashtra government to refund excess stamp duty, within four weeks from the date of receipt of the application, failing which they will have to pay interest at the rate of 12% per annum.

The ruling came on a case, which the petitioners, Macrotech Developers Ltd and Palava Dwellers, bought land that had been notified as ‘Integrated Township Projects (ITPs)’ situated at Kalyan and Bhiwandi under which the stamp duty for agreements and conveyances was reduced by 50% in Special Township Projects (STP). However, the state rejected the claims, stating that the concession under ITPs and the recent waiver on payment of stamp duty on the instrument of conveyance or agreement to sell any immovable property, could not be clubbed together. The petitioner appealed to the high court to which the bench held that both the waivers could be applied simultaneously and the state had to refund the excess stamp duty within the stipulated time.

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