Duties that are payable to the central government are laid down in the Indian Stamp Act. In addition, each state has a Stamp Act which lays down the stamp duty payable for transactions within that state.

Before you enter into a transaction, it is advisable to find out the stamp duty payable for that transaction. The stamp duty payable generally depends upon the monetary value of the transaction.

Failure to pay stamp duty may have any of the following consequences-

• If your document needs to be registered, registration will be refused.
• If the transaction needs to be proved in a court, an under-stamped document will not be admissible in evidence. In certain cases, you may be able to rectify this defect by paying a penalty. But in certain cases (eg:demand promissory notes), it is not possible to rectify this defect and hence, you will not be able to rely on that document in any court.