New Rule for Rental Agreements in India: E-Stamping Now Mandatory
A rental agreement is more than just a piece of paper. It sets the terms between a landlord and tenant, spelling out rights, responsibilities, and conditions of stay. From July 1, 2025, Government of India has brought in a major change to how these agreements are executed: e-stamping is now compulsory.
What has changed
Until now, landlords and tenants could use physical or digitally purchased stamp papers for their rental contracts. With the new rule, rental agreements must be executed only on e-stamp certificates generated through government-authorized portals. If not, both landlord and tenant could face a penalty of ₹5,000, and the agreement may not hold up legally.
Why the rule was introduced
Authorities say the move is meant to reduce fraud, ensure authenticity, and make rental contracts easier to verify. Legal experts also recommend e-stamping as it strengthens the agreement in case of disputes.
Key details in a rental agreement
A valid rental agreement should clearly state:
- Names, addresses, and PAN details of both parties
- Property description and rent amount
- Security deposit and maintenance terms
- Payment schedule and penalties for delays
- Renewal and termination clauses
- Notice period and rent revision terms
- Condition of the property at move-in and move-out
- Dispute resolution mechanism and jurisdiction
For residential properties, security deposits usually range between two to three months’ rent. For commercial leases, they may be higher. Agreements often include a rent escalation clause of 5–10 percent annually to adjust for inflation.
Stamp duty and registration
Stamp duty varies by state. From July 2025, e-stamping is mandatory for all agreements. If the lease term exceeds 11 months, registration with the sub-registrar is also required. Without registration, the agreement may not be legally enforceable.
Tax rules for landlords
Rental income must be reported under “Income from House Property” in income tax returns. Landlords can use ITR-1 if rent is their only income, or ITR-2 if they have additional sources. Tenants paying rent above ₹1 lakh a year must deduct TDS before payment.
Resolving disputes
Disputes can be settled through discussions, tribunals, civil courts, or arbitration if the agreement includes such a clause. Keeping a record of payments and communication is advised.
The bottom line
From July 2025, only e-stamped rental agreements will be considered valid in India. Both residential and commercial contracts fall under this rule. Tenants and landlords should ensure their documents are properly stamped and, where required, registered, to avoid penalties and future conflicts.
