Specimen Leave and License explained: this guide covers what Specimen Leave and License 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.
What Is a Leave and License Agreement?
A Leave and License Agreement is an arrangement where the owner of a property (the licensor) grants permission to another person (the licensee) to use the property for a specified purpose and duration, without transferring any interest or creating a tenancy. Under Section 52 of the Indian Easements Act, 1882: "Where one person grants to another, or to a definite number of other persons, a right to do, or continue to do, in or upon the immovable property of the grantor, something which would, in the absence of such right, be unlawful, and such right does not amount to an easement or an interest in the property, the right is called a license."
The key distinction from a lease is that a license is revocable and does NOT create any interest in the property — the licensee has only a personal right to use the property, not a proprietary right. This is why landlords prefer leave and license agreements over lease agreements — the licensee cannot claim tenancy rights or protection under rent control laws.
License vs Lease — Critical Legal Differences
| Feature | Leave and License | Lease |
|---|---|---|
| Legal Nature | Personal permission to use | Transfer of interest in property |
| Governing Law | Easements Act, 1882 S.52 | Transfer of Property Act, 1882 S.105 |
| Interest Created | NO interest in property | Creates leasehold interest |
| Revocability | Revocable (with notice) | Not easily revocable during term |
| Tenancy Protection | No Rent Control Act protection | Tenant gets statutory protection |
| Transferability | Cannot be transferred/assigned | Can be assigned (unless restricted) |
| Death of Licensee | License terminates | Lease continues with heirs |
| Registration | Required if >12 months (varies by state) | Required if >12 months (TPA S.107) |
Specimen Leave and License Agreement — Residential
LEAVE AND LICENSE AGREEMENT
This Agreement is made on at
BETWEEN:
Mr./Ms. , owner of the premises described herein, residing at (hereinafter called the "Licensor")
AND
Mr./Ms. , residing at (hereinafter called the "Licensee")
WHEREAS:
(a) The Licensor is the owner of the residential premises situated at , more particularly described in the Schedule hereto (the "Licensed Premises").
(b) The Licensee has requested the Licensor to grant leave and license to use the Licensed Premises for residential purposes, and the Licensor has agreed on the terms set out below.
NOW THIS AGREEMENT WITNESSETH:
1. Grant of License: The Licensor hereby grants to the Licensee a non-transferable, non-assignable license to use and occupy the Licensed Premises for residential purposes only, for a period of [11/24/36] months commencing from to .
2. License Fee: The Licensee shall pay a monthly license fee of Rs. (Rupees only), payable on or before the [5th/7th/10th] of each calendar month, by to the Licensor's account.
3. Security Deposit: The Licensee has paid a refundable security deposit of Rs. (equivalent to [2-10] months' license fee) to the Licensor. The deposit shall be refunded within [30/60] days of vacating the premises and handing over vacant possession, after deducting: (a) any unpaid license fee, (b) utility bills, (c) cost of repairs for damage beyond normal wear and tear.
4. Permitted Use: The Licensed Premises shall be used exclusively for residential purposes by the Licensee and his/her immediate family. The Licensee shall NOT: (a) use the premises for any commercial, industrial, or illegal purpose, (b) sub-license or allow any third party to occupy the premises, (c) make any structural alterations without the Licensor's written consent, (d) cause nuisance or disturbance to neighbors.
5. Maintenance: (a) Licensor's responsibility: major structural repairs (roof leakage, wall cracks, plumbing main lines, electrical wiring), property tax, and society maintenance charges. (b) Licensee's responsibility: day-to-day maintenance, minor repairs (taps, switches, bulbs), electricity charges, water charges, gas charges, and internet/cable bills.
6. Termination: (a) This Agreement shall terminate on expiry of the license period. (b) Either party may terminate earlier by giving [1/2/3] month(s) written notice. (c) The Licensor may terminate immediately if: the Licensee defaults on license fee for [2] consecutive months, uses premises for unauthorized purposes, causes damage to the property, or engages in illegal activity. (d) Upon termination: the Licensee shall vacate and hand over vacant, peaceful possession within [15/30] days.
7. Lock-In Period: Neither party shall terminate this Agreement during the first [6/11] months (lock-in period), except by mutual written consent. If the Licensee vacates during the lock-in period: the security deposit shall be forfeited. If the Licensor terminates during the lock-in period: the Licensor shall pay [2] months' license fee as compensation to the Licensee.
8. Escalation: The license fee shall increase by [5-10]% at the end of each [11/12]-month period upon renewal.
9. Society NOC: The Licensor shall obtain the necessary No Objection Certificate from the Housing Society / Apartment Association for the Licensee's occupation, at the Licensor's expense.
Stamp Duty and Registration
Maharashtra: Leave and License agreements for periods up to 60 months must be mandatorily registered under the Maharashtra Rent Control Act, 1999 (Section 55). Stamp duty: calculated based on license fee amount and deposit. Example: for 11-month agreement in Mumbai — stamp duty approximately 0.25% of total license fee + refundable deposit. Registration charges: Rs. 1,000.
Karnataka: Stamp duty on license agreements: Rs. 100-500 (flat) for agreements up to 12 months. Registration: optional for agreements up to 12 months, mandatory for longer periods.
Delhi: Stamp duty: 2% of annual rent × term of agreement. E-registration available through the Revenue Department portal. Registration is mandatory for agreements exceeding 12 months.
General Rule: Under the Registration Act, 1908: leases exceeding 12 months must be registered. For leave and license: state-specific rules apply. In Maharashtra: registration is mandatory regardless of duration. In most other states: registration is mandatory only if the license period exceeds 12 months.
Why 11-Month Agreements Are Common
Most residential leave and license agreements in India are for 11 months because: (a) under the Registration Act, 1908: leases up to 12 months need not be registered (except in Maharashtra where all periods require registration), (b) avoiding rent control protection: tenants under leases may acquire tenancy rights under state Rent Control Acts — 11-month licenses avoid this risk, (c) periodic renewal: the agreement is renewed every 11 months (typically with a 5-10% increase), allowing the licensor to reassess terms. However, courts have looked beyond the label — if the arrangement is essentially a lease (exclusive possession, long duration, repeated renewals), courts may treat it as a lease despite being labeled as "leave and license."
TDS on Rent/License Fee
Under Section 194-IB of the Income Tax Act: if the monthly license fee exceeds Rs. 50,000, the licensee (individual/HUF — not subject to tax audit) must deduct TDS at 5% (currently 2% per Budget 2024 amendment) on the annual license fee and deposit using Form 26QC within 30 days of the end of the financial year or termination of the agreement. The licensee issues Form 16C (TDS certificate) to the licensor. For companies and entities subject to tax audit: TDS at 10% under Section 194-I on rent/license fee exceeding Rs. 2.4 lakh per annum.
Disclaimer: This article is for informational purposes only and does not constitute legal or professional advice. While every effort has been made to ensure accuracy based on the latest laws and amendments, readers should consult a qualified professional before acting on any information provided. For expert assistance, contact us.