Stamp Duty In UP: Understanding The Basics

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Stamp Duty
Stamp Duty

Stamp duty is a tax that is imposed on various kinds of documents when they are executed, delivered or recorded. In the Indian state of Uttar Pradesh, stamp duty is levied on a wide range of transactions such as property transfers, lease agreements, and loan agreements, among others. In this article, we will discuss the basics of stamp duty in UP and its impact on the real estate sector.

What is Stamp Duty?

Stamp duty is a tax that is imposed on legal documents, including agreements, deeds, and conveyances. It is levied by the state government and varies from state to state. The rate of stamp duty is usually a percentage of the transaction value or the market value of the property.

Stamp Duty in UP

In Uttar Pradesh, stamp duty is levied on various types of documents, including:

  • Property transfers
  • Lease agreements
  • Loan agreements
  • Gift deeds
  • Power of attorney
  • Partnership deeds
  • Affidavits
  • Indemnity bonds

The rate of stamp duty in UP varies depending on the type of document and the transaction value. For example, the stamp duty for property transfers in rural areas is 5%, while in urban areas it is 7%.

Impact on Real Estate Sector

Stamp duty is a significant cost for property buyers and can impact the affordability of a property. For example, if the stamp duty on a property worth Rs. 50 lakhs is 7%, the buyer will have to pay Rs. 3.5 lakhs as stamp duty.

Stamp duty also impacts the revenue of the state government. The collection of stamp duty is a significant source of revenue for the government and is used for various development projects.

Equitable Mortgage vs Registered Mortgage

When it comes to taking a loan against property, there are two types of mortgages – equitable mortgage and registered mortgage. Let’s understand the difference between the Equitable Mortgage vs Registered Mortgage.

Equitable Mortgage

An equitable mortgage is created by depositing the title deeds of the property with the lender. The lender becomes the equitable mortgagee and has the right to sell the property in case of default by the borrower. An equitable mortgage does not require registration and is a common practice in the banking industry.

Registered Mortgage

A registered mortgage is created by executing a mortgage deed and registering it with the sub-registrar of assurances. The mortgage deed contains details of the property, the loan amount, and the terms and conditions of the loan. The registration of the mortgage deed provides protection to the lender in case of any disputes over the property.

Key Differences

Registration: An equitable mortgage does not require registration, while a registered mortgage requires registration with the sub-registrar of assurances.

Documentation: An equitable mortgage is created by depositing the title deeds with the lender, while a registered mortgage is created by executing a mortgage deed.

Protection: A registered mortgage provides greater protection to the lender in case of disputes over the property.

Conclusion

Stamp duty is an important tax that is levied on various legal documents, including property transfers, lease agreements, and loan agreements, among others. It is a significant source of revenue for the state government and impacts the affordability of a property. When taking a loan against property, it is essential to understand the difference between an equitable mortgage and a registered mortgage to make an informed decision.