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Stamp Duty on Works Contract in Madhya Pradesh

Stamp Duty on Works Contract in Madhya Pradesh: What You Need to Know

If you`re a contractor in Madhya Pradesh, you may be wondering about the stamp duty on works contracts. The good news is, the Madhya Pradesh government has recently revised the stamp duty rates on works contracts, bringing relief to many contractors. In this article, we`ll explain what you need to know about stamp duty on works contracts in Madhya Pradesh.

What is Stamp Duty?

Stamp duty is a tax levied on the legal recognition of various documents, such as agreements, contracts, deeds, and instruments. The stamp duty charges vary from state to state, and the rate of duty is usually a percentage of the transaction value.

What is a Works Contract?

A works contract is an agreement between a contractor and a client for the execution of works, such as construction, repairs, maintenance, and renovation of buildings, roads, bridges, dams, and other infrastructure projects. Works contracts are governed by the Indian Contract Act, 1872, and the various state laws regulating the construction industry.

Stamp Duty on Works Contracts in Madhya Pradesh

In Madhya Pradesh, the stamp duty on works contracts was previously levied as a lump sum, which varied depending on the type of works contract. The rates ranged from Rs. 5,000 to Rs. 25,000 per contract, making it difficult for small contractors to comply with the law.

However, the Madhya Pradesh government has recently revised the stamp duty rates on works contracts, making it more affordable for contractors. The new rates are as follows:

– For works contracts costing up to Rs. 1 lakh, the stamp duty is Rs. 1000

– For works contracts costing between Rs. 1 lakh and Rs. 5 lakhs, the stamp duty is 1% of the contract value

– For works contracts costing above Rs. 5 lakhs, the stamp duty is 2% of the contract value

The revision of stamp duty rates is a welcome move by the Madhya Pradesh government, as it will reduce the burden on small contractors and improve compliance with the law.

How to Pay Stamp Duty on Works Contracts in Madhya Pradesh

To pay stamp duty on works contracts in Madhya Pradesh, the contractor must purchase non-judicial stamp papers from the authorized vendors. Then, the contractor must execute the works contract on the stamp paper and get it signed by both parties. Finally, the contractor must present the stamped works contract to the registrar of the sub-district or district for registration.

Conclusion

In Madhya Pradesh, stamp duty on works contracts has been revised to make it more affordable for contractors. The new rates are based on the value of the contract, making it easier for small contractors to comply with the law. To pay stamp duty on works contracts, contractors must purchase non-judicial stamp papers, execute the works contract on the stamp paper, and get it registered with the registrar of the sub-district or district. By following the correct procedures, contractors can avoid penalties and legal complications while carrying out their works contracts in Madhya Pradesh.

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