Provisions of Section 55 of the Maharashtra Rent Control Act, 1999 states that every tenancy agreement, regardless of its tenure, must be in writing and should duly comply with the stamp duty and registration laws associated with the rental property.
When renting out a property or taking one on rent, there are a host of legal formalities involved. All agreements for leave and license must be stamped and registered. While this remains the basic rule, the rates and laws vary in accordance with the state you wish to lease a property in. For the purpose of this article, let’s take a look at the stamp duty and registration laws for a rental property in the state of Maharashtra.
The agreements for leave and licence are required to be stamped and registered and a stamp duty must be paid, to get this task completed. As stamp duty is a state subject, all states have different rates and laws dealing with stamp duty. Here, we shall discuss the law as applicable to stamp duty and registration of leave and licence transactions, in the state of Maharashtra.
The stamp duty on lease agreements in Maharashtra is governed by the Bombay Stamp Act, 1958. It is administered by Article 36 read with Article 25 of Schedule 1 to the Act. All leave and license agreements must be stamped with a flat stamp duty charge of 0.25 percent of the total rent for the period. Note that the rate of stamp duty is the same for both residential properties as well as commercial properties, for a period not exceeding 60 months. n case any non-refundable deposit is also paid to the landlord, stamp duty at the same rate shall be charged on such non-refundable deposits, as well.
In order to reduce the incidence of stamp duty, people used to pay a significant amount as interest-free deposit, along with nominal rent. This lacuna has been plugged and now, in cases where any refundable deposit is collected by the landlord, a notional annual interest of 10 per cent is imputed on such interest-free deposit and you have to pay stamp duty at the same rate, on such interest for each year of the term of the licence agreement.
Stamp duty payable on a rental agreement
Monthly rental x No of months = A
Advance rent for the period/non-refundable deposit = B
10% x Refundable deposit x No of years of the agreement = C
Total amount subject to stamp duty = D = A+B+C
Stamp duty = E = 0.25% x D
For example, if you enter into a leave and licence agreement for 24 months, with a monthly rent of Rs 25,000 and a refundable deposit of Rs five lakhs, you will have to pay a stamp duty of Rs 1,750 (being 0.25% on rent of Rs six lakhs for two years and interest of Rs one lakh for two years).
Monthly Rent (2 years) = Rs. 6,00,000
Deposit (2 Years ) = Rs. 10,00,000
10% of Deposit = Rs. 1,00,000
Total Amount = Rs. 7,00,000 *0.25%
Stamp Duty = Rs. 1750
As per the provisions of Section 55 of the Maharashtra Rent Control Act, 1999, every tenancy agreement must be in writing with mandatory registration, regardless of its tenure. One simply needs the tax receipt of the tenant, landlord, a few documents of the witnesses like passport-size photos, ID proof, electricity bill, and property documents.
The registration fee for tenancy agreements in Maharashtra varies from location to location. For instance, for properties that come under the municipal corporation area, the registration fee is Rs. 1000. For rural areas, on the other hand, it is Rs. 500. It is extremely important that both the landlord and the tenant get the rent agreement registered, as failure to do so could lead to penalising the landlord in the form of three months of imprisonment, and a fine of Rs. 5000.
Registering the tenancy agreement is also crucial for tenants in the way that the agreement consists of all provision regarding the lease. This document can aid in the resolution of any dispute that may arise between the landlord and tenant.
How to register rent agreement online in Maharashtra
Step 1:Create a profile. Go to the e-filing (https://efilingigr.maharashtra.gov.in/ereg/) website. Click “New” to create your profile registered under the e-filing website’s database.
Step 2:Post successful creation of the profile, the site redirects you to “Property Details Page”. Enter details of property like Taluka, Village, Property type, Unit Area, Address and other details as available on the e-filing website’s “Property Detail Page”. Save furnished details.
Step 3: Upon successful completion, a token number will be generated. Applicants needs to use this token number as your user ID for next login.
Step 4: Enter party details and save the details added. Fill second party details by clicking “Add : Party Details” and save the changes
Rent & Other Terms –
Enter owner and if applicable, tenant details.
Stamp Duty –
The applicant can pay the stamp duty charges and fees online by generating an online challan receipt. Stamp duty calculation is generally derived basis a few particulars that need to be mentioned while registering a property:
- Complete address of the property
- Name of the landlord, occupant, and if applicable, the previous occupant/owner.
- If the property has already been included in a city survey, include the CTS number.
- If said property is in the outside town or a land parcel then name of the geographical area where same is located, like Revenue village or name of Taluka.
Schedule an appointment –
Post successful payment of necessary fees, the applicant needs to book an appointment with the sub-registrar. Arriving at the sub registrar’s with the necessary documents in print ensures that successful registration of the applicant’s property is conducted swiftly.