Section 25 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 25 of the Indian Stamp Act, 1899 solves a valuation problem. If an instrument secures an annuity or other sum payable periodically, or if the consideration for a conveyance is such a sum, what is the amount on which ad valorem duty is worked out? The section gives three rules, depending on whether the payments run for a fixed period, for ever or for an indefinite time, or until the end of a life.
The amount secured by the instrument, or the consideration for the conveyance, is deemed to be: (a) for a definite period, the total amount to be paid; (b) for perpetuity or an indefinite time not ending with a life in being, the total payable during twenty years from the date the first payment becomes due; and (c) for an indefinite time ending with a life in being, the maximum amount payable during twelve years from the same date. The rate then comes from the State for most instruments.
How to read this article
This article is based on the consolidated text of the Act consulted (latest amendment shown: Act 13 of 2021); later amendments should be checked. It explains the central Act only. Stamp duty on most instruments is fixed by the law and schedule of the State where the instrument is executed, so the State must be checked for the rate; section 25 tells you the amount to which a rate is applied, not the rate. The worked arithmetic below is on the amount deemed secured, not on any duty. If you are drafting an annuity or a deed in which the price is paid in instalments over time, our agreement drafting service can help you structure and describe the payments clearly.
When section 25 applies
The section applies in two situations:
- where an instrument "is executed to secure the payment of an annuity or other sum payable periodically"; or
- where "the consideration for a conveyance is an annuity or other sum payable periodically".
In the first, the thing to value is "the amount secured by such instrument". In the second, it is "the consideration for such conveyance". In both, the section says what that amount is deemed to be "for the purposes of this Act". The Act does not define "annuity" in section 2, and the text consulted gives no definition, so the section takes the words in their ordinary sense. A conveyance is defined in section 2(10); see our article on the conveyance definition.
The three rules
Clause (a): a definite period
Where "the sum is payable for a definite period so that the total amount to be paid can be previously ascertained", the amount is "such total amount". If the instrument says Rs 2,000 a month for five years, the total can be worked out in advance, and that total is the amount deemed secured.
Clause (b): perpetuity or an indefinite time
Where "the sum is payable in perpetuity or for an indefinite time not terminable with any life in being at the date of such instrument or conveyance", the amount is "the total amount which, according to the terms of such instrument or conveyance, will or may be payable during the period of twenty years calculated from the date on which the first payment becomes due".
The elements are:
- the sum is payable for ever, or for an indefinite time;
- the time is not terminable with any life in being at the date of the instrument or conveyance; and
- the amount deemed secured is what will or may be payable in the first twenty years, counted from the date the first payment becomes due, and not from the date of the instrument.
Clause (c): an indefinite time ending with a life
Where "the sum is payable for an indefinite time terminable with any life in being at the date of such instrument or conveyance", the amount is "the maximum amount which will or may be payable as aforesaid during the period of twelve years calculated from the date on which the first payment becomes due".
The word "maximum" matters: if the payments could vary, the highest amount that may be payable within the twelve years is taken. The reference to a "life in being at the date of such instrument or conveyance" ties the rule to a person alive on that date.
The rules side by side
| Clause | Payment pattern | Amount deemed secured or paid |
|---|---|---|
| (a) | Definite period, total can be ascertained in advance | Such total amount |
| (b) | Perpetuity, or indefinite time not terminable with a life in being | Total that will or may be payable during twenty years from the date the first payment becomes due |
| (c) | Indefinite time terminable with a life in being | Maximum that will or may be payable during twelve years from the date the first payment becomes due |
Worked arithmetic (on the amount deemed secured)
These examples use invented figures and work out only the amount deemed secured, not the duty.
Definite period. Tanvi executes a deed securing payment of Rs 2,000 a month to her aunt for five years. The total is 60 payments of Rs 2,000, that is Rs 1,20,000. Under clause (a), Rs 1,20,000 is the amount deemed secured.
Perpetuity. A trust deed secures Rs 6,000 a year to a temple in perpetuity. Counting twenty years from the date the first payment becomes due, the total that will be payable is 20 times Rs 6,000, that is Rs 1,20,000. Under clause (b), that is the amount deemed secured, even though the payments will in fact go on beyond twenty years.
Life annuity. Mr Rao sells land to his nephew in return for Rs 6,000 a year, payable until Mr Rao's death. The payments are for an indefinite time terminable with a life in being at the date of the conveyance. Under clause (c), the amount deemed to be the consideration is the maximum payable in twelve years from the date the first payment is due, which is 12 times Rs 6,000, that is Rs 72,000, so long as the sum is fixed at Rs 6,000 a year. If the annual sum could rise, the highest amount that may be payable in those twelve years is the one taken.
The deemed amount is then the base for the ad valorem duty on the instrument or conveyance, at the rate of the State where it is executed. For the broader approach to valuing property and consideration, see our general note on how stamp duty is calculated, and for transfers against debts and mortgages, the article on section 24.
Need help drafting a periodic payment arrangement?
Where a price or support is paid over time, the way the payments are described decides which rule of section 25 applies. A short agreement drafting review can help you describe the term, the first payment date and the end of the payments precisely.
Key takeaways
- Section 25 values an annuity or other periodical sum for duty when an instrument secures it or when it is the consideration for a conveyance.
- A definite period: the total amount to be paid.
- Perpetuity or an indefinite time not ending with a life in being: the total payable in twenty years from the first payment due date.
- An indefinite time ending with a life in being: the maximum payable in twelve years from the same date.
- The deemed amount is the base for duty; the rate comes from the State for most instruments.
Read next
- Section 24 of the Indian Stamp Act, 1899: transfer in consideration of debt or subject to mortgage
- Section 26 of the Indian Stamp Act, 1899: stamp where value of subject-matter cannot be ascertained
- Section 20-23 of the Indian Stamp Act, 1899: valuation of foreign currency, securities and interest
- Stamp duty on sale deed and conveyance deed
Disclaimer: Based on the consolidated text of the Indian Stamp Act, 1899 published by the Department of Revenue, whose latest amendment shown is Act 13 of 2021, as consulted on 2 October 2026. Only the central text is covered: stamp duty on most instruments is fixed by the law and schedule of the State where the instrument is executed, and State amendments, rules, notifications and later amendments should be checked. This article is general information, not legal advice; check the official text before acting.