Lease vs Leave and Licence in India: The Difference That Decides Registration, Stamp Duty and How You Get the Premises Back
Lease and leave and licence are different legal relationships with different registration, stamp and eviction consequences. Which one you have depends on substance, not the title. How to tell them apart, which to use for an office or a shop, and how to execute and track each.
A business taking an office signs whatever the landlord's broker hands over, titled "Lease Deed" or "Leave and Licence Agreement" more or less at random. The title does not decide the relationship; the substance does, and the consequences differ in registration, stamp duty, the occupier's rights and how the owner recovers possession. This guide explains the distinction and how to choose and manage each. Position as of October 2026.
The legal difference
Lease. Section 105 of the Transfer of Property Act, 1882 defines a lease as a transfer of a right to enjoy immovable property for a time, for consideration. The tenant acquires an interest in the property: exclusive possession, the right to exclude the landlord, and protection against eviction except by due process.
Licence. Section 52 of the Indian Easements Act, 1882 defines a licence as a right to do something on another's immovable property which would otherwise be unlawful, without creating any interest in the property. The licensee has permission to use, not possession; the owner retains control.
Courts look at the terms and the conduct: exclusive possession, the owner's retained access and control, the duration and the language used. Calling a document a licence while granting exclusive possession for years does not prevent a court from treating it as a lease.
Why the distinction matters
| Lease | Leave and licence | |
|---|---|---|
| Interest in property | Yes | No |
| Registration | Mandatory if term exceeds one year, year to year, or yearly rent (Registration Act s. 17(1)(d); TPA s. 107) | Not required by central law; mandatory in Maharashtra for all leave and licence agreements under section 55 of the Maharashtra Rent Control Act, 1999 |
| Stamp duty | State schedule article for leases | State schedule article for leave and licence (Maharashtra has a specific one) |
| Recovery of possession | Through the lease's termination provisions and, where applicable, rent control legislation and court process | Revocation of licence; owner may recover possession more readily, though self-help is not permitted and court process may still be needed |
| Typical use | Long-term commercial premises, factories, land | Residential and short-term commercial occupation, co-working, shop-in-shop |
Choosing for a business
- Office for five years with fit-out: a registered lease. The investment in fit-out needs the security of a tenancy and a lock-in.
- Short-term or flexible space: leave and licence, with a clear licence fee, duration, and the owner's retained access.
- Shop in a mall or a kiosk: usually a licence or a concession agreement, with the operator's rules.
- Residential accommodation for employees: leave and licence (registered if in Maharashtra).
Execution and formalities
- Stamp before signature (section 17, Indian Stamp Act, 1899). Leases are charged on rent and deposit over the term; leave and licence in Maharashtra has its own basis.
- Registration: leases over one year must be by registered instrument; Maharashtra leave and licence must be registered (the landlord is responsible and faces a fine or imprisonment under section 55(3) of the Rent Control Act if it is not).
- Electronic execution: neither is excluded by the IT Act's First Schedule; sign with Aadhaar eSign or DSC. Registration is a separate step with the sub-registrar, online in Maharashtra for leave and licence. ****
Clauses that prevent disputes in both
- Escalation: percentage and dates.
- Lock-in: period and consequences of early exit.
- Deposit: amount, refund timeline, deductions.
- Maintenance, outgoings and property tax: who pays.
- Renewal: option and notice window.
- Handover: condition, fit-out removal, dilapidations.
- For a licence: the owner's retained rights (access, control) stated expressly, consistent with the relationship actually intended.
Tracking
Rent and licence-fee escalation dates, lock-in end, renewal notice window, deposit refund date, registration validity, and property-tax or maintenance reconciliations belong in the obligation register with facilities or finance as owner.
Where Legatio fits. Legatio executes leases and leave and licence agreements with stamping and audit trails, carries registration as a tracked task, and alerts on escalations, lock-ins and renewal windows. Which relationship you need is a decision for you and your adviser.
Position stated as of October 2026. General information, not legal advice.