Circular No.16125/C2/2019, GST on Rent and Stamp Duty
The Office of the Inspector General of Registration, Chennai, issued Circular Number 16125/C2/2019, dated 16 April 2019, clarifying that Goods and Services Tax payable by a lessee must not be treated as part of the rent when calculating stamp duty on a lease deed. Registering officers must apply the clarification to future registrations and to cases with effect from 1 July 2017.
What the circular governs
Circular Number 16125/C2/2019, dated 16 April 2019, concerns the calculation of stamp duty on lease deeds under Article 35 of Schedule I to the Indian Stamp Act, 1899. It deals specifically with whether Goods and Services Tax on rent, when payable by the lessee, should be included as part of the rent for stamp duty purposes.
The Office of the Inspector General of Registration, Chennai, issued the circular following clarification from the Government and an opinion from the Advocate General of Tamil Nadu.
What the circular clarifies
The clarification distinguishes Goods and Services Tax on rent from recurring property charges that a landlord would otherwise have to pay. The explanation under Article 35 treats certain recurring charges paid by a lessee, such as government revenue, the landlord's share of cess or municipal tax, as part of the rent.
The Advocate General of Tamil Nadu concluded that Goods and Services Tax on rent is not a recurring charge on the property. It is a tax on the lease rent rather than a municipal rate, tax or other levy on the property itself.
Key points are:
- Goods and Services Tax payable by the lessee cannot be included as part of the rent when determining stamp duty.
- The clarification applies when registering lease deeds.
- All registering officers were instructed to follow the clarification.
- Registering officers must consider it for future cases and cases with effect from 1 July 2017, the Goods and Services Tax implementation date stated in the circular.
Who is affected
Circular Number 16125/C2/2019 affects lessees, lessors, property owners, businesses and professionals preparing or registering lease deeds in Tamil Nadu. It is also directed to Sub Registrars, District Registrars, Deputy Inspectors General of Registration and other registration officials.
For a lease requiring the lessee to pay Goods and Services Tax on rent, the Goods and Services Tax component should not be added to the rent solely for calculating stamp duty. The circular does not state a stamp duty rate or change the underlying treatment of municipal taxes, government revenue or similar recurring property charges.
This summary is generated from the source document to help you find what is relevant. The PDF above is authoritative. For advice on your own property, use LandLens One or speak to a qualified professional.
Common questions
Will GST paid by a tenant be added to the rent for calculating stamp duty?
No. Circular Number 16125/C2/2019 states that Goods and Services Tax payable by the lessee cannot be treated as part of the rent for stamp duty purposes.
Why is GST treated differently from municipal tax in a lease?
The Advocate General of Tamil Nadu considered Goods and Services Tax on rent to be a tax on the lease rent, not a recurring tax or levy on the property itself. Municipal tax and similar property charges may fall within the recurring charges described in the explanation under Article 35.
From what date must registering officers apply this clarification?
Registering officers were directed to consider the clarification for future cases and for cases with effect from 1 July 2017.
Does the circular specify the stamp duty rate for lease deeds?
No. Circular Number 16125/C2/2019 only clarifies that Goods and Services Tax payable by the lessee is excluded from rent for the purpose of determining stamp duty.
