STAMPDUTY ON MORTGAGE DEED

Querist : Anonymous (Querist) 16 June 2011 This query is : Resolved
One of my client wants to create Equitable Mortgage for availing of Working Capital limits from a Nationalised bank. The limit is being enhanced by 15 crs and the value of property is 12 crores . Can anyone please advise what would be the stamp duty payable and is it a one time expense or to be paid every year on renewal of credit limis. As per the Bank it has to be paid every year on reviewal and renewal of working capital loans/limits.

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PALNITKAR V.V. (Expert) 16 June 2011
Whenever credit limit is increased, the bank will renew the mortgage. hence, every renewal is taken as a new contract and stamp duty is payable on every such contract. The amount of stamp duty depends on the local stamp law.

prabhakar singh (Expert) 16 June 2011
Normally stamp duty is payable only one time.But you have mentioned of "Equitable Mortgage" which is created by deposit of "original title deed accompanied by a letter from mortgagor to mortgagee".since stamp duty is payable subject to state law ,the sum may differ from state to state,but in all cases duty will be payable only one time.Bank is stating that should there a need arises for a fresh enhanced loan,a new mortgage will have to be created in favor of bank by the borrower ,such being a case,it will attract duty a fresh,but for that the older mortgage shall get discharged and a fresh letter would be required to be written,of course an extra caution on the part of bank.

BUT DUTY EVEN IF ANY PAYABLE ON EQUITABLE MORTGAGE SHALL BE VERY NOMINAL/OR NOT AT ALL.BETTER CONSULT A LOCAL LAWYER.

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