Uttar Pradesh is considering a stamp duty of Rs 1,000 on residential rent agreements where the annual rent is Rs 2 lakh, a proposal aimed at making formal tenancy documentation cheaper and more accessible across the state.
Ravindra Jaiswal, Uttar Pradesh Minister of State for Stamp and Registration Fees, announced the proposal at a press conference, according to a report by The Times of India. The government is also planning changes to the state’s tenancy rules, including the charges applicable to rental agreements.
The proposal comes against the backdrop of widespread informal renting. Under Indian law, residential rent agreements covering 11 months do not require compulsory registration, according to the report. This has contributed to the popularity of 11-month agreements, while verbal arrangements and written but unregistered contracts remain common.
Such arrangements can create difficulties when tenants or landlords need to prove the terms of a tenancy. A verbal or unregistered agreement may not generally be relied upon as evidence unless a court permits its use. The absence of formal documentation can leave disputes over rent, tenure, eviction, renewal and other conditions harder to resolve.
The current cost structure is one factor behind the low level of registration. Malav Virani, partner at MDP Legal, told ET that stamp duty and registration charges for tenancy agreements are calculated under the existing system as a proportion of rent, at roughly 4%, based on four times the property’s circle rate. This can result in a substantial charge even when the rent agreed between the parties is comparatively modest.
As a result, some landlords and tenants avoid registration altogether. Others may prepare an agreement but leave it unregistered, reducing the documentary strength of the arrangement. The proposed lower charge is intended to address that cost barrier and encourage more parties to formalise their rental contracts.
The changes are expected to complement the Uttar Pradesh Urban Premises Tenancy Regulation Act, 2021. The legislation provides a framework for tenancy-related rights and responsibilities, but its practical effectiveness depends partly on whether tenants and property owners have clear, legally recognised records of their agreements.
Virani said a registered agreement would give tenants documented proof of the tenure, rent and other conditions. Such a record could strengthen a tenant’s position if a landlord attempted an unlawful eviction, disputed the agreed rent or denied that a tenancy arrangement existed. Registration could also help tenants access protections available under the 2021 Act.
Landlords could benefit from the same documentation. A formally registered agreement can record the period of the tenancy, payment obligations and other conditions if a tenant defaults on rent, remains in the property after the agreement expires or breaches the terms of the contract.
The proposal does not yet amount to a final change in the applicable charges. The state government will need to clarify the final structure, eligibility conditions, treatment of registration fees and implementation process before tenants and landlords can rely on the revised system. Until then, the existing rules and charges continue to apply.
