Stamp Duty on Pledge Agreement in Gujarat

Stamp Duty on Pledge Agreement in Gujarat

Stamp duty on pledge agreement in Gujarat is an important issue that every individual, firm, or company involved in pledge agreements in the state should be aware of. Stamp duty is a tax levied on certain legal documents, including pledge agreements, and is mandatory as per the Indian Stamp Act, 1899. In Gujarat, the stamp duty on pledge agreements is governed by the Gujarat Stamp Act, 1958.

What is a Pledge Agreement?

A pledge agreement is an agreement between a borrower and a lender wherein the borrower pledges certain assets as collateral for a loan. The borrower retains ownership of the assets but the lender has the right to take possession of the assets in the event of default on the loan.

Stamp Duty on Pledge Agreement in Gujarat

In Gujarat, the stamp duty on pledge agreements is levied based on the market value of the pledged assets as on the date of execution of the agreement. The stamp duty rate varies based on the value of the pledged assets. The stamp duty rates in Gujarat are as follows:

– For pledged assets valued up to Rs.100 – Rs.5

– For pledged assets valued between Rs.101 and Rs.500 – Rs.10

– For pledged assets valued between Rs.501 and Rs.1000 – Rs.20

– For pledged assets valued between Rs.1001 and Rs.5000 – Rs.50

– For pledged assets valued between Rs.5001 and Rs.10,000 – Rs.100

– For pledged assets valued over Rs.10,000 – 1% of the market value of the assets.

The stamp duty on pledge agreements in Gujarat must be paid before execution of the agreement. Failure to pay the stamp duty can result in legal consequences, including a penalty of up to 10 times the unpaid amount.

Conclusion

Stamp duty on pledge agreements in Gujarat is an important issue that should not be overlooked. It is important for individuals, firms, and companies involved in pledge agreements to be aware of the stamp duty rates in Gujarat and to pay the stamp duty before execution of the agreement to avoid legal consequences. If you are involved in a pledge agreement in Gujarat, it is advisable to consult with a legal professional to ensure compliance with the stamp duty regulations.