Karnataka Stamp Duty — Rates for Property, Lease, Share Transfer & Corporate Documents

What Is Stamp Duty in Karnataka?

Stamp duty is a state-level tax levied on the execution of legal instruments and documents under the Karnataka Stamp Act, 1957. It applies to virtually every legally binding document — from property sale deeds and lease agreements to share transfers and corporate formation documents like the Memorandum and Articles of Association. For foreign companies entering India through a subsidiary, branch office, or liaison office in Karnataka, stamp duty is an unavoidable cost at multiple stages: office lease signing, company incorporation, share issuance, and ongoing corporate transactions.

The Karnataka Stamp (Amendment) Act, 2023 — notified on 3 February 2024 — modernized rates for over 50 legal instruments, making it essential for businesses to reference the updated schedule rather than older rate cards. Additionally, registration fees were revised from 1% to 2% of property value effective 31 August 2025, further increasing transaction costs.

Karnataka as a Business Destination

Karnataka's GSDP reached approximately INR 30.70 trillion (US$ 359 billion) in FY26, making it India's third-largest state economy. The state attracted cumulative FDI of US$ 63.34 billion between October 2019 and June 2025 — second only to Maharashtra. Bengaluru hosts 25,000+ IT companies, and Karnataka leads India in services-sector exports at INR 14.04 lakh crore (US$ 159 billion) in FY25.

With this volume of business activity, stamp duty compliance touches thousands of corporate transactions daily. Understanding the rates and procedures helps foreign companies budget accurately when choosing Karnataka over other states for their India operations.

Stamp Duty Rates on Property Transactions

Karnataka uses a slab-based stamp duty structure for property conveyance, which was revised in 2024:

Note: The registration fee increased from 1% to 2% effective 31 August 2025. An additional cess of approximately 0.6% (comprising Karnataka Cess and surcharge) may apply, bringing the effective total for high-value properties to approximately 7.6%.

For foreign companies purchasing office space or industrial land in Karnataka, this means a property worth INR 5 crore would attract stamp duty of INR 25 lakh (5%) plus registration fees of INR 10 lakh (2%), totalling approximately INR 38 lakh including cess — a significant upfront cost to factor into your India entry budget.

Stamp Duty on Lease Agreements

Commercial lease agreements are the most common stamp duty event for foreign companies setting up offices in Karnataka. The rates vary by lease duration:

Practical example: A foreign subsidiary leasing a 10,000 sq ft office in Bengaluru at INR 100/sq ft/month (annual rent INR 1.2 crore) with a security deposit of INR 60 lakh for a 5-year lease would pay stamp duty of 1% on INR 1.80 crore (annual rent + proportional deposit) = approximately INR 1.80 lakh. The lease must be registered within 4 months of execution and stamped before or at the time of execution.

Unstamped or insufficiently stamped lease agreements are inadmissible as evidence in any court in Karnataka — a critical risk for foreign companies relying on lease documents for regulatory filings with the Registrar of Companies.

Stamp Duty on Share Transfers

When shares of a Karnataka-incorporated company change hands — whether through a share purchase agreement, buyback, or transfer between group entities — stamp duty applies under Article 56A of the Karnataka Stamp Act:

For a foreign parent acquiring 100% shares of an Indian subsidiary valued at INR 10 crore, the stamp duty on share transfer would be approximately INR 1,500 (0.015% of INR 1 crore face value) — a relatively nominal cost. However, for larger transactions involving downstream investment or group restructuring, the amounts can be significant.

Stamp Duty on Corporate Documents

Foreign companies incorporating entities in Karnataka encounter stamp duty on several corporate formation and governance documents:

Memorandum of Association (MOA) and Articles of Association (AOA)

For a private limited company with authorized capital of INR 10 lakh (a common starting point for foreign subsidiaries), the combined stamp duty on MOA and AOA would be approximately INR 6,500. For higher authorized capital — say INR 1 crore — the stamp duty on AOA alone would be INR 50,000.

Other Corporate Instruments

These rates reflect the amendments under the Karnataka Stamp (Amendment) Act, 2023. The increase in power of attorney rates (from INR 100 to INR 500) and affidavit rates (from INR 20 to INR 100) affects day-to-day corporate operations for foreign entities frequently executing such documents.

How to Pay Stamp Duty in Karnataka

Karnataka offers multiple modes for paying stamp duty:

1. e-Stamping (SHCIL portal): The most common method for corporate transactions. Purchase e-stamp certificates through Stock Holding Corporation of India Limited (SHCIL) centres or authorized banks. Available for any instrument value.
2. Franking: Banks and authorized institutions frank documents up to a certain value. Convenient for smaller transactions like rental agreements.
3. Physical stamp paper: Traditional method using non-judicial stamp paper purchased from licensed vendors. Being gradually phased out in favour of e-stamping.
4. Online payment via KAVERI portal: The Karnataka Registration Department's online portal (kaveri.karnataka.gov.in) allows end-to-end digital registration including stamp duty payment for property transactions.

For corporate documents filed with the MCA (Ministry of Corporate Affairs), stamp duty is paid electronically through the MCA21 portal at the time of filing forms like INC-2, INC-7, or SH-7. The system automatically calculates state-wise stamp duty based on the registered office location.

The 2023 Amendment Act — Key Changes

The Karnataka Stamp (Amendment) Act, 2023, notified on 3 February 2024, brought significant changes affecting foreign companies:

• Power of Attorney: Rates increased from INR 100 to INR 500 for single authorization, and from INR 200 to INR 1,000 for 5-10 authorizations
• Affidavits: Rate increased from INR 20 to INR 100
• Partnership reconstitution: Stamp duty on immovable property retained by the firm during partner exit increased from 3% to 5% of market value
• Modernized instrument list: Over 50 instruments were updated, including new categories for digital and fintech transactions
• Registration fee hike (Aug 2025): Registration charges for all property transactions increased from 1% to 2%

These changes were part of Karnataka's broader effort to modernize its stamp duty framework and align rates with current property values and transaction volumes.

Stamp Duty Exemptions and Concessions

Certain transactions qualify for reduced or zero stamp duty in Karnataka:

• Startups registered with KITS: Up to 100% stamp duty exemption for enterprises in Zone 1, 75% in Zone 2, and 50% in Zone 3 under the Karnataka Startup Policy 2022-2027
• SEZ units: Documents executed for SEZ operations may qualify for exemptions under central SEZ rules
• Government-to-government transfers: Exempt from stamp duty
• Amalgamation/merger orders: NCLT-approved schemes may receive stamp duty concessions on property transfers
• Gift deeds to family members: Reduced rates apply for transfers between specified family members

Foreign companies should evaluate whether their Karnataka entity qualifies for startup registration with KITS, as the stamp duty exemption can yield significant savings on the initial lease agreement and corporate document execution.

Stamp Duty Compliance Checklist for Foreign Companies

When establishing or operating a business in Karnataka, ensure stamp duty compliance at each stage:

1. Company incorporation: Pay stamp duty on MOA and AOA through the MCA21 portal at state-specific rates
2. Office lease: Stamp and register the lease agreement within 4 months of execution; calculate duty based on lease term and total rent + deposit
3. Share issuance: Pay stamp duty on allotment of shares to foreign investors via the MCA portal
4. Share transfers: Ensure 0.015% stamp duty is paid via depository (demat) or on physical share transfer forms
5. Capital increase: Pay stamp duty on SH-7 when increasing authorized capital
6. Board resolutions: While board resolutions themselves do not attract stamp duty, any instruments arising from them (loans, mortgages, guarantees) do
7. Powers of Attorney: Stamp at INR 500-1,000 depending on number of authorizations; common when appointing authorized signatories in India
8. Employment agreements: Stamp duty varies; verify current rates for service agreements

Working with a professional compliance advisor ensures no document goes unstamped — which could render it legally unenforceable in Karnataka courts.

Frequently Asked Questions