Checklist Before Signing in India

India's legal framework for document execution is shaped by colonial-era statutes that remain in force, combined with modern digital governance initiatives. The Indian Stamp Act 1899, the Registration Act 1908, and the Indian Contract Act 1872 form the backbone of document execution requirements, while the Information Technology Act 2000 governs electronic signatures. State governments have significant authority to set stamp duty rates and modify procedural requirements, creating variation across 28 states and 8 union territories.

Pay the Correct Stamp Duty

Stamp duty is perhaps the most critical step when signing legal documents in India. Under the Indian Stamp Act 1899, an unstamped or insufficiently stamped document is inadmissible as evidence in court, rendering it practically unenforceable. Key requirements include:

• Stamp duty rates are set by each state government and vary significantly (for example, property conveyance duty ranges from 4 percent in Andhra Pradesh to 7 percent in Maharashtra plus 1 percent local body tax)
• The document must be stamped before or at the time of execution; stamping after execution attracts penalties under Section 35 (up to ten times the deficiency in some states)
• E-stamping through the Stock Holding Corporation of India Limited (SHCIL) platform is available in most states and is increasingly preferred over physical stamp paper, as it reduces the risk of counterfeit stamps
• For agreements executed outside India but relating to Indian property or to be performed in India, stamping must occur within three months of the document being received in India

Verify the applicable rate using the state stamp duty schedule for the specific type of instrument (conveyance, lease, partnership deed, power of attorney, affidavit, etc.), as rates differ by document type.

Determine Registration Requirements

The Registration Act 1908 makes registration compulsory for certain documents. An unregistered document that is required to be registered has no legal effect. Compulsory registration applies to:

• Documents that create, declare, assign, limit, or extinguish any right, title, or interest in immovable property valued above one hundred rupees (Section 17)
• Leases of immovable property for terms exceeding twelve months
• Non-testamentary instruments that acknowledge receipt of consideration for creation of rights in immovable property
• Powers of attorney that authorize the attorney to sell immovable property (following the Supreme Court ruling in Suraj Lamp and Industries Pvt Ltd v. State of Haryana 2012)

Registration must be completed at the office of the Sub-Registrar within whose jurisdiction the property is situated, within four months of execution. Late registration is permitted within an additional four months on payment of a penalty up to ten times the registration fee, at the discretion of the registrar.

Verify Capacity of the Parties

Section 11 of the Indian Contract Act 1872 specifies that a person competent to contract must be:

• Of the age of majority (18 years, or 21 years if a guardian has been appointed by the court under the Indian Majority Act 1875)
• Of sound mind at the time of making the contract (Section 12)
• Not disqualified from contracting by any law (such as insolvent persons, alien enemies, or convicts)

Unlike some jurisdictions where a minor's contract is merely voidable, in India a minor's agreement is void ab initio, as established by the Privy Council in Mohori Bibee v. Dharmodas Ghose (1903). This means no obligations arise from the agreement, and it cannot be ratified upon attaining majority.

Choose the Correct Electronic Signature Type

The Information Technology Act 2000, as amended in 2008, recognizes two types of electronic signatures:

• Digital Signature: based on asymmetric cryptography using a Digital Signature Certificate (DSC) issued by a Certifying Authority licensed by the Controller of Certifying Authorities; DSCs come in Class 2 (identity verified against a trusted database) and Class 3 (in-person verification)
• Electronic Signature (e-Sign): Aadhaar-based electronic signature introduced under the IT Act amendments, where the signer authenticates via Aadhaar biometric or OTP verification, and a one-time key pair is generated

DSCs are mandatory for filing with the Ministry of Corporate Affairs (MCA21 portal), GST returns, income tax returns for certain categories, and patent/trademark applications. E-Sign is accepted for many government services and commercial documents but may not be accepted by all registering authorities for property transactions.

Include PAN and TDS Provisions

The Income Tax Act 1961 requires quoting of the Permanent Account Number (PAN) in specified transactions:

• Sale or purchase of immovable property valued at ten lakh rupees or more (Section 139A read with Rule 114B)
• Sale or purchase of motor vehicles
• Opening bank accounts and fixed deposits above fifty thousand rupees
• Transactions in securities and mutual funds above specified thresholds

For service contracts, lease agreements, and professional fee arrangements, include provisions addressing Tax Deducted at Source (TDS) obligations. The payer is required to deduct TDS at the applicable rate (typically 10 percent for professional fees under Section 194J, 10 percent for rent under Section 194-I for amounts exceeding 2.4 lakh rupees per year) and deposit it with the government within the prescribed timelines.

Comply with RERA for Real Estate Transactions

The Real Estate (Regulation and Development) Act 2016 (RERA) applies to all residential and commercial real estate projects. Before signing a property purchase agreement:

• Verify that the project is registered with the state RERA authority (check the registration number on the state RERA website)
• The sale agreement must be in the prescribed form as per state RERA rules
• The builder cannot accept more than 10 percent of the apartment cost as advance before executing a written agreement for sale (Section 13)
• The agreement must specify the carpet area (as defined under RERA, not super built-up area), possession date, and penalty for delays

Address FEMA Compliance for Cross-Border Transactions

Any contract involving a foreign party, foreign currency payments, or cross-border obligations must comply with the Foreign Exchange Management Act 1999 and the Reserve Bank of India (RBI) regulations:

• Foreign investment in Indian entities must comply with FDI policy (sector-specific caps and conditions) and be reported to RBI through the Foreign Investment Reporting and Management System (FIRMS)
• External Commercial Borrowings must comply with ECB guidelines regarding eligible borrowers, recognized lenders, end-use restrictions, and all-in-cost ceilings
• Repatriation of funds requires compliance with current account or capital account transaction regulations
• Certain sectors (multi-brand retail, media, defense, insurance) have specific FDI caps that affect the structure of joint venture and investment agreements

Execute Powers of Attorney Correctly

Powers of attorney in India require special attention:

• The document must be executed on stamp paper of the value prescribed by the state (stamp duty on a general power of attorney for property transactions can be substantial, ranging from 1 to 5 percent of property value in some states)
• The power of attorney must be notarized
• If executed outside India, it must be authenticated by the Indian consulate or embassy in the country of execution, or apostilled under the Hague Convention
• For powers of attorney relating to immovable property, registration is required at the sub-registrar's office, and the adjudication of stamp duty must be completed
• Following the Supreme Court's 2011 ruling, a general power of attorney cannot be used to effect a sale of immovable property; only a registered sale deed executed by the owner is valid

Arrange Proper Witnesses

Indian law requires two witnesses for several important document types:

• Wills under the Indian Succession Act 1925 Section 63 must be attested by two or more witnesses, each of whom has seen the testator sign or affix their mark, or has received personal acknowledgment of the signature from the testator
• Sale deeds and lease deeds are customarily executed in the presence of two witnesses who sign the document, and the Sub-Registrar will require witness identification at the time of registration
• Gift deeds of immovable property must be attested by at least two witnesses under Section 123 of the Transfer of Property Act 1882

Witnesses must be competent persons, meaning they must be of legal age and sound mind. Their identity documents (Aadhaar, PAN, passport) are typically recorded at the time of registration.

Include an Appropriate Arbitration Clause

Given the delays in Indian courts, arbitration clauses are standard in commercial contracts. When drafting the clause:

• Specify the seat of arbitration clearly, as the seat determines the supervisory court (the Arbitration and Conciliation Act 1996, as amended in 2015 and 2019, applies to domestic arbitrations and India-seated international arbitrations)
• Include the number of arbitrators and the appointment mechanism
• Specify the language of proceedings
• Consider whether the dispute should be subject to institutional arbitration (such as the Mumbai Centre for International Arbitration or the Delhi International Arbitration Centre) or ad hoc proceedings
• Be aware that the Supreme Court in PASL Wind Solutions v. GE Power Conversion (2021) has upheld the validity of two Indian parties choosing a foreign seat of arbitration