Stamp duty on a Maharashtra agreement for sale: why it is due when you sign, not at possession

Rules and rates as of 15 October 2026.

In most states, the big stamp duty bill arrives with the sale deed, at or after possession. In Maharashtra it usually arrives much earlier: when you sign and register the agreement for sale with the builder, often years before you get the keys. This explainer shows which provisions make that happen, what the Supreme Court said about it in 2024, and what you pay at each stage of a typical Mumbai or Pune purchase.

Why the agreement carries the full duty

The Maharashtra Stamp Act, 1958 charges duty on instruments, not on transactions. Article 25 of Schedule I sets the duty on a "conveyance". Explanation I to Article 25 then widens that word. As the Supreme Court reproduced it in 2024, where in an agreement to sell immovable property "the possession of any immovable property is transferred or agreed to be transferred to the purchaser before the execution, or at the time of execution, or after the execution of such agreement", the agreement "shall be deemed to be a conveyance and stamp duty thereon shall be leviable accordingly".

Read that closely. It covers possession given before signing, at signing, and possession merely agreed to be given later. A builder's agreement for an under-construction flat promises possession by a stated date, so it falls inside the Explanation. That is why the full conveyance duty is collected on the agreement itself.

Two provisos to the Explanation, as the court summarised them, matter to buyers. If a conveyance is later executed for the same property, the duty already paid on the agreement is credited against the duty on that conveyance. And section 32A of the Act, on valuation, applies to the agreement as it would to a conveyance.

What the Supreme Court decided

In Shyamsundar Radheshyam Agrawal v. Pushpabai Nilkanth Patil (Civil Appeal 10804 of 2024, judgment of 24 September 2024, 2024 INSC 730), the buyers had signed agreements for sale and taken possession the same day, but stamped them as mere agreements. They later executed sale deeds and paid duty on those.

The court held that the agreements were themselves chargeable as conveyances. The agreement "was the principal document on which stamp duty was to be paid as per Article 25", and the later sale deed "would not by ipso facto absolve the primary liability". The state could recover only the shortfall, but with penalty running from the date of the agreement, and the impounded documents could not be used as evidence until the defect was cured under section 34.

Section 4 of the Act points the same way. Where several instruments complete one sale, only the principal one bears full duty; each of the others pays ₹100.

Why the agreement must also be registered

Three laws require the agreement to be on the record, not just on stamp paper.

• Registration Act, 1908, section 17(1A). A contract to transfer immovable property for consideration, relied on for part performance under section 53A of the Transfer of Property Act, must be registered if executed after the 2001 amendment. If it is not, it has "no effect for the purposes of the said section 53A". That is the section that protects a buyer in possession.
• RERA, section 13(1). A promoter "shall not accept a sum more than ten per cent of the cost" as an advance or application fee without first entering into a written agreement for sale and registering it.
• Maharashtra Ownership Flats Act, 1963, section 4. The builder must sign a written agreement before taking any advance, the advance cannot exceed 20% of the sale price, and the agreement must be registered under the Registration Act.

The two advance limits conflict: 10% under RERA, 20% under the state's 1963 Act. For a RERA-registered project, the lower RERA figure is the one to hold the builder to; ask your lawyer if your project is not registered.

Stage by stage

Payment stage	Document	Stamp duty and registration
Booking amount, up to 10% under RERA s.13	Application form, allotment letter, receipt	No Article 25 duty is triggered by the payment itself. Whether your allotment letter needs its own stamp was not confirmed for this piece
Signing the agreement for sale	Registered agreement for sale	Full Article 25 duty, because possession is agreed to be given (Explanation I), plus registration fee and any metro cess
Construction-linked instalments	Demand letters and receipts	No further conveyance duty; the agreement is the principal instrument
Possession	Possession letter	Nothing more if the agreement was duly stamped
Any later conveyance of the same flat	Conveyance or sale deed	Duty on it, with credit for duty already paid on the agreement
Resale with possession at signing	Agreement for sale with possession	Full duty on the agreement; underpaying invites shortfall plus penalty from that date (Supreme Court, 2024)

Worked example: a ₹1.1 crore flat in Mumbai

Read this first. The Article 25 rate for Mumbai, the 1% metro cess and the cap on the registration fee could not be checked on an official page for this article: the IGR Maharashtra and India Code pages carrying the schedule and fee table refused our reader. The figures below use the rates most commonly quoted (5% duty, 1% metro cess, registration fee of 1% capped at ₹30,000), and they are unverified. Take the formula, and get the exact rates from the sub-registrar's computation or your lawyer.

Assume an agreement value of ₹1,10,00,000, at or above the ready-reckoner value, with a man as buyer.

• Stamp duty = ₹1,10,00,000 × 5% = ₹5,50,000
• Metro cess = ₹1,10,00,000 × 1% = ₹1,10,000
• Registration fee = lower of (₹1,10,00,000 × 1% = ₹1,10,000) and ₹30,000 = ₹30,000
• Total at the agreement stage = ₹5,50,000 + ₹1,10,000 + ₹30,000 = ₹6,90,000

That ₹6.9 lakh is due when you sign, on top of the booking amount. Ask your lender early whether it will fund any part of it, or plan to pay it from savings. In a Pune area the same formula applies, with the local rate.

What if the agreement is underpaid? The government's 2018 reprint of the Act sets a penalty under section 34 of 2% of the deficient duty for each month or part of a month from the date of execution, capped at four times the deficit. On the full ₹5,50,000 of stamp duty, 12 months of delay would mean ₹5,50,000 × 2% × 12 = ₹1,32,000 of penalty. The rate may have been amended since 2018, so check the current text.

Before you sign

• Do not let the builder take more than 10% of the price before a registered agreement.
• Check that the agreement is registered, not just notarised, and keep the registration receipt and the e-challan for the duty.
• If you are buying a resale flat and taking possession at signing, the agreement is your conveyance for stamp purposes. Do not defer the duty to a later deed.
• If the paperwork or the duty looks wrong, a property lawyer can check the agreement and the challan before you sign, not after.