R & D Law Chambers LLP
Practice is led by Ravish Bhatt | Advocate, Bar Council of Gujarat (G/504/2008) | Dual-qualified lawyer (India and England and Wales) | Solicitor of England and Wales (non-practising), SRA Registration No. 492 477 | ADIT, Chartered Institute of Taxation, London
Published: 5 November 2026 | Last reviewed: 5 November 2026
Scope and instruments. This page is written against the Gujarat Stamp Act, 1958 as amended by the Gujarat Stamp (Amendment) Act, 2025 (Gujarat Act No. 8 of 2025, assented to on 1 April 2025 and first published in the Gujarat Government Gazette on 2 April 2025), and refers to the Gujarat Rent Bill, 2026, which is not in force. Section 1(2) of the Stamp Amendment Act defers commencement to a date the State Government appoints by notification in the Official Gazette. Duty payable on a particular instrument depends on its terms and should be confirmed with the Superintendent of Stamps before execution. The position is stated as at 5 November 2026.
The two devices that kept commercial occupation in Gujarat cheap and flexible have both lost their footing. The Gujarat Stamp (Amendment) Act, 2025 deleted the separate leave and licence article and folded leave and licence into the lease article, so the characterisation no longer buys anything on duty. And the term, long treated as a commercial variable, now selects the duty band and the registration gate.
- What does a commercial lease in Gujarat have to settle, and in what order?
Term first, because it selects the stamp duty band and governs whether the instrument must be registered. Then the lock-in and the sum payable on an early exit, drafted as one mechanism. Then the deposit, the outgoings, holding over and the registration position. Rent and area are the easy part.
Commercial lease negotiations in Gujarat usually settle rent, area and escalation first and reach the term last, as a residual. That order is backwards, because the term is the only variable that drives three separate consequences at once: the stamp duty band under Article 30 of Schedule I, whether the instrument falls to be registered, and the commercial exposure the lock-in has to match.
The working order is term, then lock-in and the sum payable on an early exit, then the deposit and the outgoings, then holding over, then the registration and reporting position. Each of the sections below takes one of those in turn.
- How is the term chosen, and what stamp duty does it select?
Article 30 of Schedule I to the Gujarat Stamp Act, 1958 now bands duty in six steps, breaking at one year, five, fifteen, thirty and ninety nine years, with the first two bands distinguishing commercial from residential property. A lease for four years and eleven months and one for five years and eleven months sit in different bands.
Section 23(6) of the Gujarat Stamp (Amendment) Act, 2025 substituted items (i) to (viii) of clause (a) of Article 30 with six new items. The article continues to be headed “LEASE, including an under lease or sublease and any agreement to let or sub-let”, so an agreement to let is charged as a lease.
| Term the lease purports to run for | Duty under Article 30(a) as substituted |
| Less than one year | Residential property Rs. 500. Commercial property Rs. 1,000 |
| Not less than one year but not more than five years | One rupee for every hundred rupees of the average annual rent reserved. Minimum Rs. 1,000 residential, Rs. 5,000 commercial |
| In excess of five years but not more than fifteen years | Two rupees for every hundred rupees of the average annual rent reserved, subject to a minimum of Rs. 10,000 |
| In excess of fifteen years but not more than thirty years | Three rupees for every hundred rupees of the average annual rent reserved, subject to a minimum of Rs. 20,000 |
| In excess of thirty years but not more than ninety nine years | 2.5 per cent of the amount of consideration or the market value of the property, whichever is higher |
| In excess of ninety nine years | The same duty as is leviable on a conveyance under Article 20 on the market value of the property or the amount of consideration, whichever is higher |
Two things the table does not show. First, the figure in it is not the figure that is paid: section 3A of the Act charges a further forty per cent of the duty on the instruments listed in section 3A(1), and section 4 of the Amending Act substituted that list so that item (7) now reads “No. 30 (Lease and Leave and License)”. Second, the mid-length commercial lease has been taken off the conveyance rate and put on a floor: before the amendment a lease for a term in excess of three years but not more than ten years attracted “the same duty as is leviable on a conveyance under Article 20 for the amount or value of the average annual rent reserved”, whereas the band now covering five to fifteen years attracts two rupees per hundred rupees of the average annual rent, subject to a minimum of Rs. 10,000.
A separate change shifts who pays. Section 8 of the Amending Act inserted a new section 30A into the Act, placing the liability to pay proper stamp duty on the financial institution where an instrument referred to in clauses (a) to (g) of section 30 is executed in favour of or by a bank, non-banking finance company, housing finance company or the like. That new section 30A of the Act is a different provision from Article 30A of Schedule I, which the same Amending Act deleted and which is dealt with below.
- How should lock-in and early exit be drafted?
As one mechanism. A clause that says only that the tenant may not terminate, and is silent on what follows if it does, leaves the landlord proving loss and the quantification running through section 74 of the Indian Contract Act, 1872. State the lock-in, the sum payable on a walk-out within it, and why that sum is a genuine pre-estimate.
A lock-in is a promise not to determine the lease for a stated period. Commercial leases in Gujarat routinely contain one and routinely stop there, saying nothing about the consequence of breaching it. The landlord is then left to prove its loss, and the quantification runs through section 74 of the Indian Contract Act, 1872, in a dispute the parties could have priced in the document.
The clause that works does three things. It states the lock-in period. It states the sum payable if the tenant determines within it, expressed as a number of months’ rent rather than as a formula. And it records, in the clause itself, why the parties regard that sum as a genuine pre-estimate of the landlord’s loss, for example the period a comparable commercial tenant for premises of that kind would take to find and the rent-free fitting-out period such a tenant would expect. Drafted that way the figure is the bargain, not the opening position in a damages enquiry.
Exit after the lock-in needs its own treatment: the notice period, whether rent is payable in lieu of notice where the tenant leaves without giving it, and what happens to the deposit on each route out. A lease that provides for a lock-in and then falls silent on post-lock-in notice leaves the landlord with a cliff edge rather than a run-off.
- Lease or leave and licence: does the distinction still save anything in Gujarat?
Not on duty. Article 30A of Schedule I, which charged a leave and licence agreement for non-residential property at fifty paise per hundred rupees irrespective of the period, was deleted by section 23(8) of the Gujarat Stamp (Amendment) Act, 2025. Leave and licence now sits within Article 30 and is banded by term.
Before the amendment, Article 30A of Schedule I read: “LEAVE AND LICENCE AGREEMENT relating to immovable property other than the residential property. Fifty paise for every hundred rupees or part thereof on the whole amount payable or deliverable plus the total amount of fine or premium or money advanced or to be advanced irrespective of the period for which such leave and licence agreement is executed.” The words “irrespective of the period” are what made the device attractive: a long commercial occupation could be documented at a flat half per cent.
Section 23(8) of the Amending Act provides, in its entirety, that “article 30A shall be deleted”. Read with section 4 of the Amending Act, which rewrites section 3A(1) item (7) as “No. 30 (Lease and Leave and License)”, the legislature has treated leave and licence as falling within Article 30 and has subjected it to the forty per cent additional duty.
| Point | Lease | Leave and licence in Gujarat now |
| Stamp article | Article 30 of Schedule I | Article 30, following the deletion of Article 30A |
| Basis of duty | Banded by the term the instrument purports to run for | Banded by term, in place of the former flat rate irrespective of period |
| Forty per cent additional duty under section 3A | Applies, item (7) of section 3A(1) | Applies, item (7) names Lease and Leave and License |
| Nature of the right | An interest in the property | A permission to occupy, which is why the device is used |
| Position if the Rent Bill, 2026 is notified | A tenancy agreement, since section 2(n) covers a lessee by whatever name | Open. Section 2(n) defines a tenant by reference to rent payable under a tenancy agreement, and a licensee paying a licence fee is not obviously within it |
The commercial point is that leave and licence in Gujarat is now a choice about the nature of the right granted, not a choice about duty. Where the parties genuinely intend a licence, the document should be drafted as one and should not reserve the incidents of a lease. Where they intend a lease, calling it a licence no longer buys anything on duty and leaves the characterisation open to challenge.
- Deposit, outgoings, holding over and registration: the clauses usually left thin
Each carries a consequence the parties rarely price. The deposit may be capped at three months if the Rent Bill, 2026 is notified. Explanation II to Article 30 no longer deems the lessee’s outgoings to be rent. A lease silent on holding over gives the landlord no lever. Registration is a separate gate from stamping.
- Deposit. Commercial deposits of six to twelve months are common in Ahmedabad. If the Gujarat Rent Bill, 2026 is notified, section 11(1) would cap the deposit at three months’ rent and section 11(2) would require refund within one month of vacant possession. A deposit clause drafted now should say what happens to the excess in that event rather than leave it to be argued.
- Outgoings. The Explanation II that the Amending Act substituted deemed a lessee’s undertaking to pay recurring charges recoverable from the lessor, such as the owner’s share of municipal rates and taxes, to be part of the rent. The Explanation II now in force reads: “For the purpose of sub-clauses (v) and (vi) of clause (a) of this article, consideration means the amount paid as deposit or premium or advance rent or an amount of average annual rent etc.” It reaches only the two longest bands and speaks of consideration rather than rent. How outgoings borne by the lessee now enter the computation in the shorter bands should be settled on the particular instrument rather than assumed from the earlier practice.
- Holding over. The Rent Bill, 2026 is instructive even though it is not in force: section 23 would make a tenant who fails to vacate on expiry or termination liable to pay “double the monthly rent”. A commercial lease silent on holding over gives the landlord no equivalent lever and leaves it to mesne profits.
- Registration. Registration is a separate gate from stamping, governed by the Registration Act, 1908 and the Transfer of Property Act, 1882. The consequences of non-registration turn on the term of the lease and on the relief sought, and they should be worked through on the instrument. Registration and the reporting obligation the Rent Bill would create are not alternatives: a lease that satisfies one does not satisfy the other.
Each of these is cheaper to settle in the document than to argue afterwards, and each needs to be worked through on the facts of the transaction and the particular wording proposed. The companion page on the Gujarat Rent Bill, 2026 and commercial premises takes the statutory side of the same problem, including the reporting obligation and the forum that would decide a dispute.
How R & D Law Chambers Works on These Matters
The practice advises landlords and tenants on commercial leases and leave and licence arrangements in Gujarat: the drafting and negotiation of lease deeds, the term and lock-in structure, deposit and exit mechanics, the stamp duty position under Schedule I to the Gujarat Stamp Act, 1958, and the registration obligations that attach to an instrument once it is executed. Where a dispute has already arisen, it advises on the forum and on the remedies available on the instrument as executed.
Related reading and services:
- The Gujarat Rent Bill, 2026 and commercial premises: https://rdlawchambers.com/gujarat-rent-bill-2026-commercial-premises/
- Contract drafting, review and management: https://rdlawchambers.com/contract-drafting/
- Terminating a commercial contract: https://rdlawchambers.com/terminating-a-commercial-contract-risk-management-strategies/
- Real estate and leisure: https://rdlawchambers.com/real-estate-and-leisure/
Disclaimer. This page is general information on the law of Gujarat and India as at 5 November 2026. It is not legal advice and no lawyer and client relationship arises from reading it. Stamp duty payable on a particular instrument depends on its terms and should be confirmed before execution. The Gujarat Rent Bill, 2026 is not in force.