Indian Law

Stamp Duty on Agreements in India: Complete State-Wise Guide

Q: Is an unstamped agreement valid in India?

An unstamped agreement is valid as a contract but is inadmissible as evidence in court under Section 35 of the Indian Stamp Act. It cannot be enforced until the deficit duty and penalty are paid.

Q: What is the penalty for not paying stamp duty?

If a document is found to be insufficiently stamped, the penalty can be up to 10 times the deficient stamp duty amount, in addition to the actual duty payable.

Q: Can I use stamp paper purchased in one state for an agreement in another?

Generally, no. Stamp duty is a state subject, and rules vary. It is highly recommended to purchase stamp paper in the state where the agreement is executed or where the property is located.

Q: How do I pay stamp duty online in India?

You can pay stamp duty online through the e-stamping system managed by Stock Holding Corporation of India Limited (SHCIL) or state-specific treasury portals (like GRAS in Maharashtra).

February 12, 2026 • 8 min read

An unstamped contract in India is like an unloaded gun: it looks real but won't work when you need it most. Stamp duty is one of the most overlooked aspects of contract execution in India, yet it can determine whether your agreement is admissible as evidence in court.

What is Stamp Duty?

Stamp duty is a tax levied by state governments on legal documents and financial transactions. When you execute a contract on stamp paper (physical or electronic), you're essentially paying the government for the legal recognition of your agreement.

The governing legislation is the Indian Stamp Act 1899, though each state has its own amendments and rates. The 2019 amendment brought significant changes, including centralized collection for securities market instruments.

Why Stamp Duty Matters for Your Contracts

⚖️ Admissibility as Evidence

Under Section 35 of the Indian Stamp Act, an instrument not duly stamped shall NOT be admitted as evidence in any court. This means your contract is essentially unenforceable if not properly stamped.

⚖️ Penalty for Deficient Stamping

If a document is insufficiently stamped, you must pay the deficit amount plus a penalty of up to 10x the deficient duty. Better to get it right from the start.

⚖️ Registration Requirement

Certain agreements (like property leases over 11 months) require both stamping AND registration. Without both, the document has no legal standing.

Types of Stamp Duty

1. Fixed Stamp Duty

A flat fee regardless of the transaction value. Examples include affidavits (₹10-₹100), general power of attorney, and adoption deeds.

2. Ad Valorem Stamp Duty

A percentage of the transaction value. This applies to property sale deeds, lease agreements, partnership deeds, and share transfer instruments. Rates vary by state.

Stamp Duty Rates for Common Agreements

These are indicative rates. Actual rates vary by state:

Rental/Lease Agreement (under 1 year): ₹100-₹500 (fixed) in most states
Rental/Lease Agreement (1-5 years): 1-2% of total rent value
Sale Deed (Property): 3-8% of property value (highest in Maharashtra, lowest in Andhra Pradesh)
Partnership Deed: ₹500-₹1,000 (fixed)
NDA / Confidentiality Agreement: ₹100-₹500 (fixed)
Power of Attorney: ₹100-₹500 (general), ad valorem for property-specific
Loan Agreement: 0.1-0.5% of loan amount
Employment Agreement: ₹100-₹200 (fixed)
Service Agreement: ₹100-₹500 depending on state

E-Stamping: The Modern Alternative

Physical stamp papers are being phased out across India. E-stamping through the Stock Holding Corporation of India Limited (SHCIL) is now available in most states and offers several advantages:

✅ No counterfeit risk: Each e-stamp has a unique identification number (UIN) verifiable online
✅ Available 24/7: Purchase through authorized collection centers or online portals
✅ Any denomination: Unlike physical stamp papers (capped at ₹100 per sheet), e-stamps can be for any amount
✅ Faster verification: Courts and registration offices can instantly verify authenticity

How to Purchase E-Stamps

Visit the SHCIL portal or an authorized collection center
Fill in the required details (parties, document type, value)
Make payment via NEFT/RTGS/DD
Receive the e-stamp certificate with a unique UIN
Print the agreement on the e-stamp or attach it

State-Wise Stamp Duty Highlights

Maharashtra

Among the highest stamp duty rates in India. Leave & License agreements: 0.25% of the total agreement value. Sale deeds: 5-6% (with 1% surcharge in Mumbai).

Delhi

Rental agreements: ₹100 for agreements under 1 year. Sale deeds: 4-6% depending on gender of buyer (women get 2% reduction). Fully e-stamping enabled.

Karnataka

Rental agreements: 1% for 1-10 year leases. Sale deeds: 5% (3% in BBMP areas for first-time buyers). Partnership deeds: ₹500 fixed.

Tamil Nadu

Among the highest for property: 7% stamp duty on sale deeds. Rental agreements: 1% of annual rent for leases over 1 year. Service agreements: ₹100 fixed.

Common Mistakes to Avoid

❌ Using the wrong denomination: Always calculate the exact duty required—underpayment invites penalties
❌ Backdating on stamp paper: Stamp paper must be used within 6 months of purchase
❌ Wrong state stamp paper: Use stamp paper from the state where the agreement is executed
❌ Skipping stamp duty entirely: Many businesses skip stamping for service agreements and vendor contracts—risky
❌ Using franking instead of e-stamp for high values: Some sub-registrars don't accept franked documents above certain values

Don't Sign Blindly.

Templates are just a start. Use AI to scan your specific contract for hidden risks and unfair clauses in 60 seconds.

Analyze Your Contract Free →

Key Takeaways

✅ Stamp duty is mandatory for most agreements to be admissible in court
✅ Rates vary significantly by state—always check local laws
✅ E-stamping is safer and more convenient than physical stamp papers
✅ Penalties for deficient stamping can be up to 10x the shortfall
✅ Always get your contract reviewed before spending on stamp duty

Stamp duty is cheap insurance. A properly stamped agreement gives you the legal standing to enforce your rights in court. Skipping it to save a few hundred rupees could cost you lakhs in an unenforceable contract.

Frequently Asked Questions

Is an unstamped agreement valid in India?

An unstamped agreement is technically valid as a contract, but it is inadmissible as evidence in court under Section 35 of the Indian Stamp Act. This means you cannot enforce it until you pay the deficit duty plus a penalty.

What is the penalty for not paying stamp duty?

The penalty for insufficient stamping is severe. The collector of stamps can levy a penalty of up to 10 times the amount of the deficient duty involved, which often exceeds the value of the potential dispute.

Can I use stamp paper purchased in one state for an agreement in another?

Generally, no. Stamp duty is a state subject, and revenue goes to the specific state government. You should purchase stamp paper in the state where the agreement is executed or enacted. If parties are in different states, use stamp paper of the state where the first party signs or where the property is located.

How do I pay stamp duty online in India?

You can pay stamp duty online through the e-stamping system managed by Stock Holding Corporation of India Limited (SHCIL) for many states. Some states like Maharashtra have their own portals (GRAS) for online payment.