Stamp duty for Loan Agreements in Kerala: All You Need to Know
When you take out a loan in Kerala, you are required to pay stamp duty on the loan agreement. Stamp duty is essentially a tax that is levied by the government on certain types of legal documents in order to make them legally binding. In this article, we will explain everything you need to know about stamp duty for loan agreements in Kerala.
What is Stamp Duty?
Stamp duty is a state-imposed tax that is levied on certain types of legal documents, such as loan agreements, property sale deeds, partnership deeds, and so on. The duty is payable by the person in whose name or on whose behalf the document is executed. The rate of stamp duty varies from state to state and is calculated as a percentage of the transaction value.
The stamp duty collected by the government is used for various purposes such as development projects, welfare schemes, and infrastructure development.
Stamp Duty for Loan Agreements in Kerala
In Kerala, the stamp duty on loan agreements is charged as per the Kerala Stamp Act, 1959. The stamp duty for loan agreements is calculated as a percentage of the loan amount sanctioned. The rate of stamp duty for loan agreements in Kerala is 0.1% of the loan amount subject to a maximum of Rs.10,000.
For example, if you take out a loan of Rs.1 lakh, you will have to pay a stamp duty of Rs. 100. Similarly, if you take out a loan of Rs.5 lakhs, the stamp duty will be Rs. 5,000.
Who is responsible for paying Stamp Duty?
The person who is availing the loan is responsible for paying the stamp duty. The stamp duty should be paid before the execution of the loan agreement. The stamp duty can be paid in cash or through a demand draft drawn in favor of the concerned authorities.
What happens if you do not pay Stamp Duty?
Failure to pay stamp duty on a loan agreement can lead to legal complications. The loan agreement may not be considered as a legally binding document, which means that it cannot be used as evidence in a court of law. Moreover, you may have to pay a penalty of up to ten times the original stamp duty amount if you fail to pay within the prescribed time.
Paying stamp duty on your loan agreement is a crucial part of the loan disbursal process. It makes the loan agreement legally binding and helps you avoid legal complications in the future. So, make sure to pay the stamp duty on time to ensure a smooth loan disbursal process.