Stamp duty on works contract

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This query is : Resolved

S. Ananthanarayanan (Querist)

20 January 2021 The contract agreement is silent about who would bear the stamp duty.
Question: (i) which party has bear ?
(ii) the work is in Maharashtra. What is the rate? Value of work: ranging from Rs 3 cr to 25cr. The work involves provision of materials.

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)

11 July 2024 In Maharashtra, the liability for payment of stamp duty on a contract typically depends on the terms negotiated between the parties. Here are the general guidelines:

1. **Liability for Payment:**
- **Buyer's Responsibility:** In the absence of any specific agreement or provision in the contract regarding stamp duty, it is generally the buyer who bears the stamp duty charges.
- **Mutual Agreement:** Parties can mutually agree to share or allocate the stamp duty costs as part of their negotiations. This should ideally be specified in the contract to avoid any misunderstandings.

2. **Stamp Duty Rates in Maharashtra:**
- **Rate Structure:** Stamp duty rates in Maharashtra vary based on the nature of the contract and the value of the transaction.
- **Specific to Contracts:** For contracts involving the provision of materials or services, the stamp duty is typically calculated as a percentage of the consideration or value involved in the contract.

3. **Stamp Duty Calculation:**
- **Slab Rates:** In Maharashtra, stamp duty rates are categorized into slabs based on the value of the contract. For instance, contracts ranging from Rs 3 crore to Rs 25 crore fall within specific slab rates.
- **Exact Rates:** The exact rates can vary and are subject to periodic revisions by the Maharashtra government. They can be obtained from the official website of the Maharashtra government or by consulting with the local Sub-Registrar's office.

4. **Payment and Compliance:**
- **Payment Process:** Stamp duty is typically paid using stamp papers of appropriate value, which are then attached to the contract document. The stamp duty payment must be made before or at the time of execution of the contract to ensure legal validity.
- **Legal Compliance:** It is important for both parties to ensure that the stamp duty is paid correctly and within the prescribed timelines to avoid penalties or legal challenges.

Given the significant variation in the value of the work (ranging from Rs 3 crore to Rs 25 crore), it is advisable to consult with a local legal expert or a chartered accountant in Maharashtra. They can provide specific advice tailored to your contract and ensure compliance with the applicable stamp duty regulations.

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