STAMP DUTY ON LEAVE AND LICENCE AGREEMENT:

By Bankimchandra P. Khona

Posted on 4th Feb 2002

1) In Maharashtra Stamp Duty on Leave & Licence Agreement is payable as per Article 36 (A) of Schedule - I of Bombay Stamp Act, which reads as under:-

"36A. Leave and Licence Agreement.

(a) Where the leave and licence

Agreement is with a licence fee

or rent fixed or otherwise,-

(i) for a period not exceeding Two Thousand rupees;

one year without any renewal

clause;

(ii) for a period exceeding one Ten thousand rupees;

year but not more than three

years without any renewal

clause;

(iii) For a period exceeding three The same duty as is

years with or without any leviable on a lease

renewal clause; article 36;

(b) Where the leave and licence The same duty as is

agreement is executed for leviable under clause

security deposit or money (a)(i), (ii) or (iii),

advanced with or without licence as the case may be and

fee or rent fixed. in addition one percent of security deposit or

money advanced or to be

advanced.

2. Considering 36A (a) (i) & ( ii) - very interesting situation arises. 36A (a) (i) & (ii) provides stamp duty in a case where the licence is for a period not exceeding one year without any renewal clause. What happens if licence is not for a period exceeding one year but there is renewal clause. In a case where the licence is not exceeding one year and there is a provision of renewal clause it is respectfully submitted that the Article 36 A (a) (i) will not apply. In fact whole Article 36A will not apply. Similarly, if licence is exceeding for a period of one year but it is not more than three years and if there is a provision for renewal then 36A (a) (ii) also does not apply. In fact 36A will not apply.

2. Then the question arises what happens to Leave & Licence Agreements wherein they are for less than period of one year or more than one year or less then three years or if there is a provision of renewal clause , Article 36A of Schedule - I of Bombay Stamp Act will not apply. The Article which will apply to such Leave & Licence Agreement is an Article 5 (h) of Schedule - I ) of the Bombay Stamp Act, which reads as under:-

" Agreement or its records or memorandum of Agreement ( H), if not, otherwise provided for. Stamp Duty on such Agreement is Rs.20/-.

4) It is, therefore, submitted that stamp duty payable in a case of Agreement of Leave & Licence for a period not exceeding one year but there is renewal clause or Leave & Licence Agreement for a period exceeding one year but not more than three years but with renewal clause then such Leave & Licence Agreement will be required to be stamped with only Rs.20/- and not Rs.2000/- or Rs.10,000/- as wrongly contended by the Stamp Authorities and the Sub-Registrar. Therefore, it is in the interest of parties if they want to pay Rs.20/- as licence fee in a case of licence less than three years should have a clause of renewal.