Sale Agreement and Stamp Duty

Sale Agreement and Stamp Duty

The Karnataka Stamp Act was enacted in 1957, and primarily concerns itself with specifying the various stamp duties to be paid for the authorisation of instruments such as letters, contracts, agreements, bonds, deeds, affidavits etc. This is often proportional to the value of the asset to be transferred or the instrument used.

In the case of Sale Agreement, the Karnataka Stamp Act provides for two kinds of scenarios :-

  1. Sale Agreement with possession

If possession of the property is delivered or is agreed to be delivered then the stamp duty will be the same as that of a conveyance of the property.

2. Sale Agreement without possession

If the possession of the property is not delivered. In this case, the stamp duty would be calculated at the rate of 0.1% of the Sale Consideration or Market Value which ever is higher.

IllustrationIn the case of a sale consideration agreed in the Sale Agreement is Rs. 1 Crore and the property worth is worth Rs. 90 Lakhs (market value), then if in case the possession is handed over as per sale agreement, then the stamp duty would be 5% of the market value, i.e, 5 lakh rupees. In the case of the possession not being handed over, then the stamp duty would be 10 paise per 100 rupees, and would amount to Rs 10,000.


Any Stamp Duty paid under the Sale Agreement is adjustable while registering the Sale Deed, provided the original Agreement is shown to the Sub-Registrar.

Penalty for Non-payment of Stamp Duty

As per the Karnataka Stamp Act, non-payment of stamp duty can be punished with a fine. In case stamp duty is not paid, the document cannot be considered by the Court and cannot be used as evidence. The instruments presented to any public officer will be impounded.

When a public official seizes a document, they transfer it to the relevant Deputy Commissioner (District Registrar) so they may calculate the stamp duty that needs to be paid. After giving the concerned party the chance to present their reasons regarding the stamp duty to be paid, the Deputy Commissioner (District Registrar) will decide the stamp duty to be paid. If he determines that the document was not properly stamped, he may impose a penalty of at least up to ten times the deficit total duty to be paid, depending on the circumstances