Extension Granted by Law Sikho Support Team

EXERCISE 1

PART 1
As per Section 5(b) of the Karnataka Stamp, 1957 for the purchase or sale of a government
security on has to pay

One rupee for every ten thousand rupees of the value of security or the part thereof of the
amount of the security when the security id purchased or sold.

The same has a maximum limit of rupees one thousand which means that the maximum cap
of the stamp duty in cases of purchase or sale of Government security is rupees one thousand.

In the present factual matrix, Mr. Sharad bought Government Security of Rs. 20,000 so the
stamp duty on the same would be:

Particulars Amount
For every Rs. 10,000 of the value of the Rs. 1
security the stamp duty is
For Government Security worth Rs. Rs 1 * (20,000/10,000)
20,0000 the stamp duty will be = Rs. 1 * 2 = Rs. 2

So the stamp duty to be paid to the government by Sharad will be Rs. 2.

PART 2
STAMPING OF ELECTRONIC CONTRACTS
In India, though there is no provision in the Indian Stamp Act,1899 that specifies the
stamping duty for electronic records. However, the definition of instrument in the Act is very
wide to encompass electronic records as the definition of “instrument” includes every
document by which any right or liability is, or purports to be, created, transferred, limited,
extended, extinguished or record".

Any electronic contract which follows the criteria of a valid contract under Section 10 of the
Indian Contract Act, is valid under the law therefore is covered under the definition of
contract as it creates a liability on the other party.
Additionally, in the present case Mr. Akash is bound by the Maharashtra Stamp Act, 1958 as
he leasing in Pune (Maharashtra), the Act specifically recognises the stamping of
electronic documents in its explanation of Section 2(l) defining instrument where it
clarifies that the term document would contain electronic record as per Section 2 (1)(t)
of the IT Act, 2000.

The MSA also defines the term "execution" as under, which takes into account, attribution of
electronic records as provided under Section 11 of the IT Act:

""executed" and "execution" used with reference to instruments, mean "signed" and
"signature";

Wherein the terms "signed" and "signature" also include attribution of electronic record as
per section 11 of the Information Technology Act, 2000."

APPLICABILITY OF STAMPING E- CONTRACTS

From the preceding, it so seems that specified documents, if covered by the MSA would
attract payment of stamp duty upon their execution, even if the execution takes place
electronically. Similarly, several other states like Delhi, Uttar Pradesh, Karnataka, Gujarat
and Rajasthan also consider electronic record under the definition of "instrument", hence
imposing stamp duty on such electronic records.

METHOD TO EXECUTE THE CONTRACT ELECTRONICALLY

While executing the contract Electronically both Mr. Akash and Mr Avdhesh should consider
that the contract of lease agreement needs to be authenticated by the respective parties to the
contract. There are two ways by which a contract can be authenticated:

 Firstly, by affixing digital signature certificate

 Secondly by affixing the hand written signature electronically and notification,

It must be understood that the electronic signature should be considered reliable only when:

 electronic signature is linked only to an individual and not to any other person;
 electronic signature while executing the contract was under the control of the signatory to
whom it belongs;
 any alteration to be made to electronic signature after affixing signature is detectable.
 MODES OF PAYMENT OF STAMP DUTY:
E-GRAS: E-GRAS is the electronic aggregator of government receipts of a State
Government. Any person who wishes to deposit any government receipt can do the same by
using the aforesaid facility. In addition to the above, many State Governments in India have
also provided an option to pay stamp duty by using the E-GRAS facility. Where the amount
of stamp duty to be paid is less than INR 50,000 then the payment may be done either online
or by depositing cash in an authorised bank branch and if the amount is more than that, then it
must be paid via NEFT or RTGS.

E-Stamp Paper: Payment of stamp duty through e-stamp paper is also one of the popular
methods in India. In this mode of payment, the amount of stamp duty can be transferred to
the bank account of SHCIL or any other authorised e-stamp paper vendor. SHCIL or the
authorised e-stamp vendor on receipt of stamp duty amount generate e-stamp paper of
requisite amount.

eSBTR: In addition to the above mentioned methods, the State Government of Maharashtra
has provided a facility for the payment of stamp duty through the Electronic Secure Bank and
Treasury Receipt (eSBTR). In eSBTR system, a person will have to be visit the bank, and
makes the requisite payment of stamp duty to a designated officer after filling up the
necessary application form. The concerned officer, after entering the details in their database
online, issues an eSBTR which acts as a proof of payment of stamp duty similar to a stamp
paper.

E-Stamping with eSBTR allows businesses to purchase stamp paper online in Maharashtra,
and streamline the eStamping process.

The process of eStamping a document using eSBTR essentially involves –

 logging into an eStamping portal

 choosing the required stamp paper denominations
 entering the stamping details
 uploading the document to be stamped,
 making the stamp duty payment online.
eSBTR is a convenient and online method of purchasing eStamp paper online in
Maharashtra. The process was introduced by the state government to enable the digitization
of stamp duty payments.

Mr Akash and Mr. Avdesh must have will need to have a NetBanking account, with over-the-
counter processes available at banks registered with GRAS in order to avail eSBTR
facility .E-Stamping with eSBTR allows businesses to purchase stamp paper online in
Maharashtra, and streamline the eStamping process.

The payment would of the stamp duty would be made, as per Rule 3 of The Maharashtra e-
Payment of Stamp Duty and Refund Rules 2014, the stamp duty required to be paid under
the act, may be paid online into the Virtual Treasury through Government Revenue and
Accounting System (GRAS).

Maharashtra E-Registration and E- filling Rules, 2013 facilitates online payment of

stamp duty and registration fees. In such case, both the party can digitally sign the
document and get it stamped electronically on the same day. Rule 10 of the said rules states
that:

Rule 10. For online registration, Stamp duty and registration fees shall be paid online to
Government of Maharashtra through Government Receipt Accounting System (GRAS)
(Virtual Treasury) by electronic transfer of funds or any other mode of payment prescribed by
the Government.

For registering under these rules:

 The appending of electronic signature or biometric tthumb print and capture of digital
photo, is mandatory for all the executants whenever and wherever necessary.
 PAN card or UDI Number or any such document is mandatory to be provided.
 The executing parties must submit their email ids and mobile numbers for correspondence
and notification,

It must be understood that the electronic signature should be considered reliable only when:

 electronic signature is linked only to an individual and not to any other person;
 electronic signature while executing the contract was under the control of the signatory to
whom it belongs;
 any alteration to be made to electronic signature after affixing signature is detectable
 EXERCISE 2

LEGAL OPINION
To,
Mr. Roshan
Businessman
Abc Rice Mill,
23,XYZ Nagar, Delhi

Gupta & Associates

Ms. Vanshika Gupta,Parnter     e.g. By Courier/
Gupta & Associates
123, ABC Road, Delhi

     Date : 30.10.2022

Sir,

Sub: Legal Opinion 

on
Registration and stamping of Rent Agreement for 12 months

Ref Your e-mail dated 28.10.2022

Background
Mr. Roshan owns a Three storeyed Building in B Block, Derawal Nagar, Model Town, Delhi
wherein each floor is a 2 BHK and balcony. He has decided to rent the second floor for
residential purposes. Mrs. Rekha, lawyer based in Noida wants to rent the same apartment for
twelve months for an agreed rent of Rs 20,000 per month. Mr. Roshan wants legal advice to
understand the requirements that need to be met under the Stamp Duty Act and the
Registration Act, 1908 for registering the Rent Agreement.

Queries

From your mail Mr. Roshan I have understood that the following are your queries with
regards to Registration and stamping of the Rent Agreement.

 Is having a Rent Agreement mandatory in Delhi?

 What is the procedure to register the lease agreement in Delhi?
 Should the Rent Agreement be notarised?
 What are the documents needed for registration of a rent agreement in Delhi?
 What is the cost of registration and stamping of rent agreement in Delhi?
 What will happen if you does not pay the adequate Stamp duty?
 What stamping process does Delhi follow?
 What legal fees do you take in assisting in the registration of the rent agreement?

Responses to Queries

Is having a Rent Agreement mandatory in Delhi?

As per the Registration Act, 1908 it is mandatory the registration of a lease agreement if the
occupancy tenure mentioned in the agreement is 12 or more than 2 months.

Is it compulsory to register the Rent Agreement?

As per the Delhi Control Act, 1995 there must be mandatorily be a written rent agreement
and its registration if the rental period is for 12 or more than 12 months. In the present case
since my client’s tenant will stay for a period of 12 months the registration of the rent
agreement is compulsory.

What is the procedure to register the lease agreement in Delhi?

It will be my client’s responsibility to get the rent agreement registered under the Registration
Act. For registering the rent agreement:
 Firstly, both the parties have to go to the sub-registrar office for registering the same. This
can be done within four months of the creation of the deed.
 Secondly, at the time of the registration both Mr. Roshan and Mrs. Rekha would have to
present and bring along them two witnesses.
If either Mr. Roshan or Mrs. Rekha cannot be present at the time of registration, they can
appoint power of attorneys to finalise the agreement.

Should the Rent Agreement be notarised?

Since notarisation is not registration, the notarisation of rental agreement cannot be used a a
replacement of a registered deed and the same cannot be used as evidence under the courts.
However, it is usually done to simply make the unregistered document as a legal address
proof which is attested by the notary.

What are the documents needed for registration of a rent agreement in Delhi?
 Mr. Rohan would have to provide the original copy of the title deed as a proof of
ownership
 The tax receipts
 Address proof of both the parties. It can be a photocopy of one’s passport, Aadhaar card,
driving licence, etc. Carry the original ID cards with you for verification.
 Two passport-sized photos of the landlord and the tenant.
 Identity proof such as a copy of a PAN card or Aadhaar card.
 Rent agreement printed on stamp paper.
 DD of Rs.1100 towards registration charges

What is the cost of registration and stamping of rent agreement in Delhi?

The cost of rent agreement registration in Delhi includes stamp duty, registration fee, the
legal advisory fee, etc. In Delhi, you have to get the e-stamped agreement paper and print the
rental conditions on it. The stamp duty applicable on the rent agreement is as mentioned
below:

 For 11 months: 2% of 12-month average rent.

 For less than a five-year rental period: 2% of 12-month average rent.
 For five to less than 10-year rental period: 3% of 12-month average rent.
 For 10 to 20-year rental period: 6% of 12-month average rent.

Since the rent agreed between Mr. Roshan and Mrs. Rekha is Rs. 20,000 the stamp duty on
the same will fall under the second category i.e 2% of the 12-month average rent

Additionally, Rs 100 is paid for the Security deposit submitted

Stamp duty = Rs 4800

12*20,000 = Rs. 2,40,000

2,40,000* 2% = Rs. 4800

Apart from stamp duty, Rs 1,100 is payable towards registration charges which is paid
through a demand draft.

Total of registration and stamp duty would be 4800 + 1,100 + 100 = 6,000

What will happen if Mr. Roshan does not pay the adequate Stamp duty?

In case there arises a dispute between both the parties, if Mr. Rohan approaches the court and
there is insufficient stamp duty paid then the court will charge 10 times of the original stamp
duty i.e., 4800*10 = Rs. 48,000

What stamping process does Delhi follow?

Delhi has dropped the conventional stamp paper systems and shifted entirely to the e-
Stamping system operated by Stock Holding Corporation of India (SHCIL). So Mr. Rohan
would have to approach the e-Stamping vendors and purchase it from them.

Mr. Roshan would have to provide your name and the purpose in the application form. The
conventional Stamp papers are no longer used in Delhi.
The payment however can be made through : cheque/demand draft/pay
order/RTGS/NEFT/account to account transfer.

What legal fees do we take in assisting in the registration of the rent agreement?

We at Gupta & Associates specialise is rent agreements as well take full responsibility in
registration and stamping of the legal agreements.

Our fees is divided into two parts Drafting the Rent Agreement : Rs 5000 ( excluding the
stamping and registration fees)

Consultation Fees: Rs.3500 /- + GST

We hope that the above shall suffice for your present purposes. We shall be happy to provide
a detailed analysis of the issues considered herein, should you so require. Please do not
hesitate to contact us for any clarifications. 

Yours truly,
Vanshika Gupta,
B.B.A L.L. B, L.L.M
Partner, Gupta & Associates,
+91 983344216
Vanshika@gupta.associates.com