Exemption from Stamp Duty for MSMEs - Karnataka

This scheme is administered by the Karnataka Industrial Policy 2020‑25 and continues into the Karnataka Industrial Policy 2025‑30. The purpose of this scheme is to encourage micro, small and medium enterprises by removing or reducing the stamp duty and registration charges burden on key documents related to setting up/financing industrial units in Karnataka. For you as an MSME, the benefit is that you can save on upfront legal/documentation costs when executing loan agreements, sale/lease deeds, mortgage/hypothecation deeds etc., thereby improving your cost‐structure and ease of doing business.

Key Features
Financial Assistance
Eligibility Criteria
Documents Required
Application Process for the Scheme

Key Features

100 % exemption of stamp duty in backward zones: If your enterprise is located in Zone 1 or Zone 2 , the scheme offers full (100 %) exemption of stamp duty on the specified documents.
Differential benefit for special category entrepreneurs: If you as promoter come under SC/ST/Women/Minority/Physically challenged/Ex-servicemen, you may be eligible for higher or extended exemptions. For example, in Zone 3, special category gets 75% exemption vs nil for general category.
Applicability to various deeds: The exemption covers documents such as loan agreements, credit deeds, mortgage & hypothecation deeds executed for availing loans from banks/institutions; also lease, lease-cum-sale and absolute sale deeds of industrial plots/sheds/factories allotted by entities like Karnataka Industrial Areas Development Board , Karnataka State Small‐Scale Industries Development Corporation etc.
Exemption applies for a defined period: For many documents, the exemption benefit is valid for the initial 5 years of the unit or from the date of notification.
Benefit varies by zone: For Zone 3 (more developed districts/areas) general category units may not get any exemption, while special category units may get 75 %.

Financial Assistance

Component	Assistance Provided	Detailed Explanation
Stamp Duty Exemption for specified deeds	100% (or zone‐wise % as per category) exemption of stamp duty	Example: If you are a micro enterprise in Zone 1 and you execute a mortgage deed for availing loan, you will pay zero stamp duty under this scheme. If you are in Zone 3 , you may get nil exemption. For special category in Zone 3 you may get 75% exemption.
Concessional Registration Charges	Registration charges at a concessional rate (₹ 1 per ₹ 1,000)	Example: For a deed by eligible MSME, instead of full registration charge, you pay ₹ 1 per ₹ 1,000 of value.

Eligibility Criteria

Who can apply:

Enterprises registered as micro, small or medium under the relevant state/central definition, located in Karnataka.
Deeds executed for eligible purposes: e.g., loan agreements, credit or mortgage or hypothecation deeds for availing loans from specified institutions; lease or lease‐cum‐sale or absolute sale deeds executed by industrial enterprise in respect of industrial plots/sheds in approved industrial parks/estates.
For the period of initial scale as specified in the policy.

Who cannot apply:

Units located in Zone 3 may not get full exemption for general category .
Deeds not in respect of specified institutions or not for industrial plots/sheds may not qualify.
Units that do not meet the industrial zone classification or other policy norms may be disqualified.

Documents Required

Udyam/MSME Registration certificate.
Allotment letter or lease/lease-cum-sale/industrial plot/shed acquisition document in approved estate.
Loan sanction letter/term sheet for MSME loan from recognised financial institution.
Deed: mortgage, hypothecation, credit deed, sale/lease deed etc.
Zone classification certificate/approval under industrial policy.
Special category certificate (if applicable for SC/ST/women/minority etc).
Self-certification or affidavit about commencement/use of premises as per policy.

Application Process for the Scheme

Option 1: Apply with Bullit

Click here to start with guided support. Our team verifies eligibility, compiles documents, and handles application & follow-ups on your behalf. You can monitor progress while focusing on operations.
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Option 2: Through the Department of Industries & Commerce / Single Window Portal

Register your enterprise (Udyam/MSME) and ensure zone-classification is determined.
Submit an application to avail the stamp duty exemption benefit with the relevant district DIC or Single Window facilitation office, citing the incentive under the Karnataka Industrial Policy .
Upload/submit required documentation (loan deed, mortgage/hypothecation deed or industrial plot allotment order) for verification.
After approval the exemption is processed: stamp duty payable amount is reduced or waived as per policy in the eligible zone.
Maintain records for compliance, as audits may occur.

Option 3: Via Bank / Lending Institution Coordination

Approach your lending bank for MSME loan; inform the bank you’ll avail stamp duty exemption under Karnataka policy.
The bank coordinates with the state nodal office/ DIC to obtain the waiver/notification for the stamp duty on the mortgage/loan deed.
Proceed to execute the deed once exemption approval is obtained, thereby saving the stamp duty cost.