Introduction
A lease agreement is the legal document that gives a tenant (lessee) the right to use a landlord’s (lessor’s) property for a defined period and on agreed terms. Whether it is a home, shop, office, or warehouse, a written, clear, and law‑compliant lease prevents disputes, misunderstandings, and financial losses. In Maharashtra, 11‑month leases are commonly executed on notarisation, while leases of 12 months or more must be registered at the Sub‑Registrar’s office. This article explains what a robust lease should contain, how registration and stamp duty work, how the Maharashtra Rent Control Act interacts with your lease, how GST/insurance/taxes affect commercial leasing, and the practical mistakes to avoid.
What is a Lease Agreement and what should it include?
A lease is the arrangement under which a landlord gives the right to use the property to a tenant for a fixed period, subject to conditions. For validity, the agreement must be in writing and signed by both parties. Two witnesses are required at the time of registration; in a simple (notarised) agreement, witnesses are not always legally mandatory, but are recommended to strengthen evidentiary value. A strong draft should narratively cover: full particulars of both parties (name, address, ID such as Aadhaar/PAN), complete property address, building/flat/shop number, carpet/built‑up area (sq. ft./sq. m.), purpose of use (residential/commercial), start and end dates, rent amount and due date, mode of payment, security deposit and refund conditions, responsibility for routine outgoings (electricity, water, society maintenance), allocation of minor/major repairs, policy on sub‑lease/assignment, process for termination on breach, and the notice period. Keep these clauses clear, balanced, and aligned with applicable laws.
Registration and Stamp Duty: Practical rules in Maharashtra
An 11‑month lease is typically executed on notarisation—with the appropriate value of stamp paper/e‑stamp. Do note, a notarised document carries limited evidentiary weight; for stronger proof in court, registration is preferable. For 12 months or more, registration at the Sub‑Registrar is mandatory; notarisation alone is not sufficient. Maharashtra provides e‑Stamping—you can pay stamp duty and registration fees online. During registration, both parties and witnesses are present, biometric/photo capture is done, and a registered copy is issued. Under‑stamping can invite penalties, so estimate duty correctly by considering rent, deposit, and tenure.
11 months vs 12+ months—Key differences
| Aspect | 11 months (typical) | 12 months or more |
|---|---|---|
| Legal requirement | Usually notarised; registration not mandatory | Registration at Sub‑Registrar is mandatory |
| Evidentiary value | Limited | Stronger proof in court |
| Fees | Stamp paper/e‑stamp | Stamp duty + registration fee |
| Process | Simpler | Formal; both parties & witnesses must attend |
For long‑term, high‑value, or commercial leases, registration is the safer choice.
Maharashtra Rent Control Act, 1999—What it means for you
The Act applies to both residential and commercial premises. It governs how rent may be determined/raised, notice periods, tenant protection, and dispute resolution. Draft your lease consistent with this Act. For example, extremely one‑sided conditions—like compelling the tenant to vacate on an unreasonably short notice—can be challenged. Also write clear clauses for electricity/water/society maintenance, repairs, sub‑leasing, and compliance with noise/safety norms.
Essential clauses—what to write and why
Parties’ details: Precise identification avoids future ambiguity. Property details: Complete address, area, parking, and common‑area usage reduce disputes. Purpose of use: Residential vs commercial affects licensing, tax, and insurance needs. Term: Start/end dates, renewal process, and escalation (for example, 5% every 11th/12th month) should be recorded. Rent: Amount, due date (e.g., on or before the 5th), payment mode (NEFT/UPI/cheque), and late charges/interest must be set out. Security deposit: Amount, time‑frame for refund, and specific situations that may allow deductions—typically arrears in rent/bills or breach of notice—must be clearly articulated.
Repairs & maintenance often trigger disputes; specify who does minor wear‑and‑tear repairs and who attends structural defects. Insurance claims on structure are typically the landlord’s domain. Attach an Inspection Report/Condition Record—photos/videos at move‑in, meter readings, key handover—as an annexure; at move‑out, this becomes an objective basis for any deposit deductions.
Notice period should be symmetrical and reasonable: typically 1 month for residential and 2–3 months for commercial leases. Clarify sub‑lease/assignment permissions/restrictions, especially for commercial premises. For breach—non‑payment, unauthorised use, nuisance—lay down termination and repossession process strictly via due legal procedure and notice.
Commercial leases: GST, insurance, and operating rules
Commercial premises require additional provisions—fire‑safety compliance, signage/branding permissions, use of common areas (corridors/lifts/parking), loading‑unloading timings, and written permissions for interior fit‑outs or remodelling. GST generally applies to rent of commercial premises if the landlord (supplier) is registered or crosses the registration threshold. Rent of a residential dwelling for ‘pure residential use’ is ordinarily exempt from GST; where residential premises are used for business/functional purposes, the position may differ. Clarify who bears GST, how invoicing works, and include a Tax Variation Clause so terms auto‑adjust when tax law changes. For larger leases, it is prudent for the tenant to maintain Public Liability/Fire Insurance, and for the landlord to keep structural insurance.
Tax implications (including TDS)
Rental income is taxable in the landlord’s hands—retain rent receipts, bank proofs, and TDS certificates. TDS obligations may arise under two regimes: (a) Section 194I—companies/firms (and individuals/HUFs subject to audit) deduct TDS on ‘rent of land/building’ above the prescribed annual threshold; (b) Section 194‑IB—individuals/HUFs not subject to audit must deduct TDS once a year if monthly rent exceeds ₹50,000. In your lease, specify under which section TDS, if any, applies; thresholds; the risk of higher deduction if PAN is not furnished; the certificate to be issued (Form 16A/16C); and whether payment is net of TDS or gross. (Rates/thresholds change with time—check current rules.) Residential tenancies may have different tax treatment; consult a qualified CA/tax adviser where needed.
Building compliance and legality
If the premises involve unauthorised construction or non‑compliant alterations (e.g., mezzanine/loft), leasing risks rise—municipal notices, safety hazards, and insurance claim denials. Include a landlord’s representation on the property’s legality, necessary approvals, and habitability, and a tenant’s covenant to comply with all laws/society rules (Fire‑NOC, noise, occupancy limits, etc.).
Who pays what?—A practical allocation table
| Charge/Outgo | Typical practice |
|---|---|
| Stamp duty/Registration fee | Often shared or allocated as per contract—state clearly in the lease |
| Notary/Drafting fee | Tenant or both parties, by agreement |
| Society NOC/Membership | As per local rules; often landlord |
| Electricity/Water | Consumer—usually tenant |
| Maintenance/CAM | As agreed—residential: landlord/tenant; commercial: usually tenant |
| Property tax | Landlord |
Inspection Report & the value of a ‘Condition Record’
Before handover, record the property’s condition with photos/videos—fixtures and fittings, paint/tiles, plumbing/electrical, appliance health, cleanliness, any damage, water pressure, meter readings, parking/access cards, and keys. Annex this to the lease. At move‑out, the same record acts as a fair basis to assess any deduction from the deposit and avoids avoidable arguments.
Notice, renewal, and termination
Keep the notice period realistic and equal for both sides. At renewal, capture rent escalation, revised deposit, legal changes, and fixes to earlier gaps through a short Addendum. On termination, outline the stepwise process: final inspection, professional cleaning (where applicable), bill closures, return of keys/access cards, and deposit refund timeline. Self‑help actions (like changing locks) may be unlawful—follow only due process and statutory notice.
Common mistakes to avoid
The most common mistake is failing to reduce verbal promises to writing. If you need permissions—for pets, signage, home‑business, late‑night operations, or extra parking—write them into the agreement. Do not keep sub‑lease/assignment policies vague. Even in an 11‑month lease, specify rent escalation, deposit refund timelines, and notice periods. Avoid entering business in illegal/incomplete buildings or without required licences—this increases the risk of insurance denial, regulatory notices, and penalties. Finally, keep scanned copies of all documents and payment proofs safe.
Registration workflow (for 12+ months)
Draft the agreement (yourself or via a lawyer/document writer). Pay stamp duty and registration fees on the e‑Stamping portal. Take an appointment and attend the Sub‑Registrar with both parties and two witnesses; after document scrutiny, biometrics, and photographs, the lease is registered and a certified copy is issued. Store the registered copy with your property records and in a digital vault. For 11‑month leases too, use appropriate stamp value, notarise, and obtain witness signatures for better evidentiary strength.
Conclusion—Clear, lawful, and balanced leases are your best defence
A lease is not mere formality; it is the legal framework that protects both landlord and tenant. By accounting for stamp duty, registration, the Rent Control Act, income‑tax/GST, insurance, building compliance, and everyday practicalities, you can write a balanced, transparent, and detailed lease that sharply lowers the risk of future disputes. With precise party details, correct property description, tenure, rent‑deposit‑bills, inspection report, notice, and breach remedies—all captured in a registered lease—your tenancy remains safe, compliant, and trustworthy.
Legal Disclaimer
This article is for general information only and is not legal, tax, or accounting advice. Stamp duty, registration, rent control, income‑tax, TDS, and GST rules in Maharashtra change over time and can vary by circumstance (residential/commercial use, parties’ tax status, turnover, etc.). Always check the latest notifications/regulations and seek written advice from a qualified advocate/CA/tax professional before signing any lease.
Read Also : How to Make a Rental Agreement and What Rules You Must Know