Stamp Duty on Escrow Agreement in Delhi

Stamp Duty on Escrow Agreement in Delhi – Everything You Need to Know

When entering into an escrow agreement, it is important to understand the implications of stamp duty. Stamp duty is the tax levied by the government on legal documents, including escrow agreements. In this article, we will discuss the stamp duty on escrow agreements in Delhi.

What is an Escrow Agreement?

An escrow agreement is a legal agreement between two parties in which a neutral third party holds funds or assets until a specific condition is met. Escrow agreements are commonly used in real estate transactions, mergers and acquisitions, and other business deals where a large sum of money is involved.

What is Stamp Duty?

Stamp duty is a tax levied by the government on legal documents. The purpose of stamp duty is to ensure the legality and authenticity of the document. The stamp duty amount varies depending on the state in which the document is executed.

Stamp Duty on Escrow Agreements in Delhi

In Delhi, the stamp duty on escrow agreements is levied under the Indian Stamp Act, 1899. The stamp duty rate for escrow agreements in Delhi is 0.1% of the amount held in escrow. For example, if the amount held in escrow is Rs. 1 crore, the stamp duty payable would be Rs. 10,000.

Who Pays the Stamp Duty?

The stamp duty on escrow agreements is generally borne by the party creating the agreement. However, in some cases, the parties may agree to split the stamp duty amount.

How to Pay Stamp Duty on Escrow Agreements in Delhi?

Stamp duty on escrow agreements can be paid either through e-stamping or physical stamp paper. E-stamping is a convenient method as it eliminates the need for physical stamp papers and reduces the chances of fraud. To pay stamp duty through e-stamping, one needs to visit the official website of the Delhi government and follow the instructions.

Conclusion

Escrow agreements are an important tool in business transactions, and it is imperative to understand the stamp duty implications associated with them. In Delhi, the stamp duty on escrow agreements is 0.1% of the amount held in escrow. The stamp duty amount can be paid through e-stamping or physical stamp paper. It is advisable to seek the help of a legal expert to draft and execute an escrow agreement to avoid any legal complications.