Stamp Duty Payable for Loan Agreement: What You Need to Know
When entering into a loan agreement, one important consideration is the payment of stamp duty. Stamp duty is a tax on legal documents, including loan agreements, and it is payable to the government.
In India, the payment of stamp duty is governed by the Indian Stamp Act, 1899. The amount of stamp duty payable varies from state to state, as each state has its own stamp duty laws.
The stamp duty payable on a loan agreement is calculated as a percentage of the loan amount. For example, in the state of Maharashtra, the stamp duty payable on a loan agreement is 0.25% of the loan amount, subject to a maximum of Rs. 25,000.
It is important to note that stamp duty must be paid at the time of execution of the loan agreement. If stamp duty is not paid, the agreement is not considered legally valid and may not be enforceable in court.
Stamp duty is usually paid by the borrower, but in some states, it may be payable by the lender.
If the loan agreement is executed in multiple copies, each copy must be stamped individually. Failure to do so can result in penalties and fines.
In some cases, exemptions may be available for stamp duty payable on loan agreements. For example, in Maharashtra, stamp duty is not payable on loan agreements executed by a small-scale industrial unit or a micro, small, or medium enterprise.
It is important to consult with a legal expert or a chartered accountant to ensure that the correct amount of stamp duty is paid on a loan agreement. Failure to do so can result in legal and financial consequences.
In conclusion, the payment of stamp duty is an important consideration when entering into a loan agreement. The amount of stamp duty payable varies from state to state and is calculated as a percentage of the loan amount. Stamp duty must be paid at the time of execution of the agreement, and failure to do so can result in legal and financial consequences. It is important to consult with a legal expert or a chartered accountant to ensure that the correct amount of stamp duty is paid.