There are different DST rates on different types of transactions like loan agreements, lease agreements, mortgages, and there are also exemptions from DST. For this post, I will discuss these, including the deadline and venue for filing the DST return.
In my previous post on How to Easily Compute DST, I was referring to DST on the sale of real property.
I will provide you as well with a blank DST form for your use and reference. Take note that most of this post was actually written by my wife.
Section 196 of the Tax Code, as amended, provides:
“SEC. 196. Stamp Tax on Deeds of Sale and Conveyances of Real Property. — On all conveyances, deeds, instruments, or writings, other than grants, patents or original certificates of adjudication issued by the Government, whereby any land, tenement or other realty sold shall be granted, assigned, transferred or otherwise conveyed to the purchaser, or purchasers, or to any other person or persons designated by such purchaser or purchasers, there shall be collected a documentary stamp tax, at the rates herein below prescribed, based on the consideration contracted to be paid for such realty or on its fair market value determined in accordance with Section 6(E) of this Code, whichever is higher: Provided, That when one of the contracting parties is the Government, the tax herein imposed shall be based on the actual consideration:(a) When the consideration, or value received or contracted to be paid for such realty, after making proper allowance of any encumbrance, does not exceed One thousand pesos (P1,000), Fifteen pesos (P15.00).
(b) For each additional One thousand pesos (P1,000), or fractional part thereof in excess of One thousand pesos (P1,000) of such consideration or value, Fifteen pesos (P15.00).
When it appears that the amount of the documentary stamp tax payable hereunder has been reduced by an incorrect statement of the consideration in any conveyance, deed, instrument or writing subject to such tax the Commissioner, provincial or city Treasurer, or other revenue officer shall, from the assessment rolls or other reliable source of information, assess the property of its true market value and collect the proper tax thereon.”
Take note that if the tax base is incorrect (for example, the selling price or the zonal value is understated to lower the DST), the true value of the property may be assessed so that the proper tax may be collected. Please refer to my previous post on How to Easily Compute DST as to the sample computations.
DST on loan agreements
“SEC. 179. Stamp Tax on All Debt Instruments. — On every original issue of debt instruments, there shall be collected a documentary stamp tax on One peso (P1.00) on each Two hundred pesos (P200), or fractional part thereof, of the issue price of any such debt instruments: Provided, That for such debt instruments with terms of less than one (1) year, the documentary stamp tax to be collected shall be of a proportional amount in accordance with the ratio of its term in number of days to three hundred sixty-five (365) days: Provided, further, That only one documentary stamp tax shall be imposed on either loan agreement, or promissory notes issued to secure such loan.
For purposes of this section, the term debt instrument shall mean instruments representing borrowing and lending transactions including but not limited to debentures, certificates of indebtedness, due bills, bonds, loan agreements, including those signed abroad wherein the object of contract is located or used in the Philippines, instruments and securities issued by the government of any of its instrumentalities, deposit substitute debt instruments, certificates or other evidences of deposits that are either drawing interest significantly higher than the regular savings deposit taking into consideration the size of the deposit and the risks involved or drawing interest and having a specific maturity date, orders for payment of any sum of money otherwise than at sight or on demand, promissory notes, whether negotiable or non-negotiable, except bank notes issued for circulation.”
DST on lease agreements
If you will be leasing out your property, DST will be imposed at the rate of P3.00 for the first P2,000.00 and an additional P1.00 for every P1,000.00 in excess of the first P2,000.00 pursuant to Section 194 of the Tax Code, to wit:
“Section 194. Stamp tax on Leases and Other Hiring Agreements. – On each lease, agreement, memorandum, or contract for hire, use or rent of any lands or tenements, or portions thereof, there shall be collected a documentary stamp tax of Three pesos (P3.00) for the first Two thousand pesos (P2,000), or fractional part thereof, and an additional One peso (P1.00) for every One Thousand pesos (P1,000) or fractional part thereof, in excess of the first Two thousand pesos (P2,000) for each year of the term of said contract or agreement.”
To compute DST, multiply the monthly rent by 12 months and then by the number of years stated in the contract. Subtract P2,000.00 and multiply the amount by .001, then add P3.00.
For example, the monthly rent is P10,000.00, and the contract is for 3 years. The DST is computed as follows:
Monthly rent P10,000.00
Multiply by 12 months
Annual rent = P120,000.00
Multiply by 3 years
Total contract amount = P360,000.00
Subtract P2,000 = P358,000.00
Multiply this by .001 = P358
Plus P3.00
DST = P361.00
As a shortcut, multiply the contract amount by .001 and add P1.00 to get the DST.
If the total contract amount is not a multiple of P1,000.00, for example, it’s P360,500.00, round it up to the next 1,000 then multiply the contract amount by .001 and add P1.00 to get the DST.
DST on mortgages
Section 195 of the Tax Code provides:
“Section 195. Stamp Tax on Mortgages, Pledges and Deeds of Trust. – On every mortgage or pledge of lands, estate, or property, real or personal, heritable or movable, whatsoever, where the same shall be made as a security for the payment of any definite and certain sum of money lent at the time or previously due and owing of forborne to be paid, being payable and on any conveyance of land, e
state, or property whatsoever, in trust or to be sold, or otherwise converted into money which shall be and intended only as security, either by express stipulation or otherwise, there shall be collected a documentary stamp tax at the following rates:(a) When the amount secured does not exceed Five thousand pesos (P5,000), Twenty pesos (P20.00).
(b) On each Five thousand pesos (P5,000), or fractional part thereof in excess of Five thousand pesos (P5,000), an additional tax of Ten pesos (P10.00).
On any mortgage, pledge, or deed of trust, where the same shall be made as a security for the payment of a fluctuating account or future advances without fixed limit, the documentary stamp tax on such mortgage, pledge or deed of trust shall be computed on the amount actually loaned or given at the time of the execution of the mortgage, pledge or deed of trust, additional documentary stamp tax shall be paid which shall be computed on the basis of the amount advanced or loaned at the rates specified above: Provided, however, That if the full amount of the loan or credit, granted under the mortgage, pledge or deed of trust shall be computed on the amount actually loaned or given at the time of the execution of the mortgage, pledge or deed of trust. However, if subsequent advances are made on such mortgage, pledge or deed of trust, additional documentary stamp tax shall be paid which shall be computed on the basis of the amount advanced or loaned at the rates specified above: Provided, however, That if the full amount of the loan or credit, granted under the mortgage, pledge or deed of trust is specified in such mortgage, pledge or deed of trust, the documentary stamp tax prescribed in this Section shall be paid and computed on the full amount of the loan or credit granted.”
To compute DST, subtract P5,000 from the contract amount, then divide what’s left by P5,000.00 and round off any decimal to the higher number. Multiply this by 10 then add P20.00.
To illustrate, if the amount secured is P106,000.00, the DST is computed as follows:
Amount secured P106,000.00
Subtract P5,000 = 101,000
Divide by P5,000.00 = 20.20
Round off to higher number = 21
Multiply by 10 = 210
Add 20 = P230 DST
As a shortcut, divide the contract amount by P5,000.00 and round off any decimal to the higher number. Multiply this by 10 then add P10.00.
Exemptions from DST
Section 199 of the Tax Code, as amended, provides the documents which are exempt from DST, including loan agreements which does not exceed P250,000, viz:
“(d) Loan agreements or promissory notes, the aggregate of which does not exceed Two hundred fifty thousand pesos (P250,000), or any such amount as may be determined by the Secretary of Finance, executed by an individual for his purchase on installment for his personal use or that of his family and not for business or resale, barter or hire of a house, lot, motor vehicle, appliance or furniture: Provided, however, That the amount to be set by the Secretary of Finance shall be in accordance with a relevant price index but not to exceed ten percent (10%) of the current amount and shall remain in force at least for three (3) years.”
Deadline for filing the DST return
Under Revenue Regulations (RR) No. 5-2009 dated March 16, 2009, the DST Return (Click here for BIR Form No. 2000-OT) shall be filed within five (5) days after the close of the month when the taxable document was made, signed, accepted or transferred. For example, the DST on a taxable document signed on April 15, 2009 will be due on May 5, 2009.
Penalties
As per Guidelines and Instructions for BIR Form No. 2000-OT, the following are applicable penalties:
1. A surcharge of twenty-five percent (25%) for the following violations:
a. Failure to file any return and pay the amount of tax due on or before the due date;
b. Filing a return with a person or office other than those with whom it is required to be filed, unless otherwise authorized by the Commissioner;
c. Failure to pay the full or part of the amount of tax shown on the return, or the full amount of tax due for which no return is required to be filed on or before the due date;
d. Failure to pay the deficiency tax within the time prescribed for its
remittance in the notice of assessment.
2. A surcharge of fifty percent (50%) of the tax or of the deficiency tax, in case
any payment has been made on the basis of such return before the discovery of the falsity or fraud, for each of the following violations:
a. Willful neglect to file the return within the period prescribed by the Code or by rules and regulations; or
b. A false or fraudulent return is willfully made.
3. Interest at the rate of double the legal interest rate for loans or forbearance of any money in the absence of an express stipulation as set by the Bangko Sentral ng Pilipinas from the date prescribed for remittance until the amount is fully remitted: Provided, That in no case shall the deficiency and the delinquency interest prescribed under Section 249 Subsections (B) and (C) of the National Internal Revenue Code, as amended, be imposed simultaneously.
4. Compromise penalty as provided under applicable rules and regulation
Please make sure you don’t miss the deadline as the penalties are significant. This happened in one of our transactions where we missed paying for the doc stamps tax by just a day and I will always regret the amount of money wasted. 🙁
Venue for filing the DST return
Please feel free to leave a comment below.
To our financial freedom!
Jay Castillo
Real Estate Investor
PRC REBL#: 3194
Blog: www.foreclosurephilippines.com
Hi Sir,
Is it the best date to notarize a Deed of Sale is on the 4th of evry month? So that there’s still 31 days allowance? Am i right? Thank you very much po.:)
Yes po, that is the best practice!
Hello Jay, I bought a condo in Taguig and was intially mortgaged to a bank. Then I applied to Pag-IBIG housing loan, where all transactions and expenses needed for the transfer from the bank to Pag-Ibig will be shouldered by me. The balance is around 3,813,000. Is this transaction covered under section 195 or 175?
Hi Jea, if you are planning to get a real estate mortgage loan from Pag-IBIG, it should fall under Section 195.
I bought a lot for php 200,000.00 in 2003 with absolute deed of sale and I want to register it now. How will i pay for the DST and the penalty of it. thank you
Hi Eleazar, the best way to know how to pay/exact amount including penalties, you will have to go to the concerned BIR Office that has jurisdiction for the location of your property and get an assessment. To give you an idea of the penalties, see below:
As per Guidelines and Instructions for BIR Form No. 2000-OT, the following are applicable penalties:
I also updated the article above and included the penalties, thanks for the idea.
Hello Jay…. how much would be the penalty and/or surcharges for late filing of DST? the developer paid its creditable w/tax last april 2014…. and no corresponding DST paid by the buyer since the buyer withdrew the funds intended for dst… ?
HI Jay. Since the buyer usually pays for the DST, what does the buyer need to bring to the BIR to have the DST assessed so he/she can pay it at the AAB? Also, once the seller pays for the CGT, who should continue with the process of requesting for the CAR, the buyer or the seller? Can the seller just give the buyer the receipt proving the CGT was paid and let the buyer work on requesting for the CAR? Can you point me to a step-by-step? Thanks.
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Hi question regarding DTS on leases. As per section 194 kasi,
“SECTION 194. Stamp Tax on Leases and Other Hiring Agreements. — On each lease, agreement, memorandum, or contract for hire, use or rent of any lands or tenements, or portions thereof, there shall be collected a documentary stamp tax of Three pesos (P3.00) for the first Two thousand pesos (P2,000), or fractional part thereof, and an additional One peso (P1.00) for every One thousand pesos (P1,000) or fractional part thereof, in excess of the first Two thousand pesos (P2,000) for each year of the term of said contract or agreement.”
Ang intindi ko, the 3 pesos per 2000 and 1 per 1000 is done every year. Meaning the computation above should be annual rent less 2000 and not yung times 12. please correct me if I’m wrong.
Hi Sir Jay,
Can I get your opinion about documentary stamp (DS)? When buying a property, you need to pay DS then when acquiring a loan to buy that property, you again need to pay DS. Isn’t it like double taxing, paying DS for the same purpose which to buy a property? I just think it’s very unfair to be taxed again for a single purpose.
Thanks,
Jerome
Sir magkanu po ba ang babayaran kong dst pag hal.P1.5M ang kabentahan ng bahay ko?!
Hi Lyn, bale 1.5% of 1.5Million, or Php22,500.
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Good day, I would like to inquire if the CA dues of the commercial bldg. for lease would be part of computing DST under Lease agreement? The CA dues was part of the contract.
Hi Janette, forgive me for asking, what does CA stand for?
As far as computation for DST on lease agreements is concerned, we believe only the lease amount is used for computing the DST.
Hi! Jay, I would like ask you about CGT and DST. I had bought a property before in the year 2003. But we failed to process the taxes in BIR then and I would like to register it now in my name. Do you have any idea how penalty I am facing? I would really like to know the process. By the way love your stuff! Very informative. More power to you and your family. God Bless
P.S.
I Just had the DOS notarized August this year
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Good day,
Sir ask ko lang po pewede po ba magexecute ng panibago deed of sale since old one is due na po 2 months ago we cant afford to pay 25% na penalty para ca capital gains & doc stamps, anyway di pa nasasubmit sa BIR ung luma…but the problem is yung property kc niloan din namin sa pag-ibig and bale ngsubmit din ng deed of sale sa kanila…Pewede po ba magexecute ng panibago deed of sale same content na nasubmit sa Pag-Ibig but different notary date?
Thank you very much in advance.
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hi sir jay..
ask ko lang po, pano po ku reninew lang po ung lease contact, may DST p po b?
and pano po kung wala ng contarct na pinirmahan both parties?
Tnx po
good morning, i would like to know how to compute for the penalty if I failed to pay the documentary stamps of deed of sale on the deadline…. Is the computation per day after the 5th day? thanks… Lin
hi po Sir Jay,I so happy reading your site, so informative,Sir just want to ask, may kinuha po kaming H/L sa isang new subdivition in Q.C.,we paid the 50k reservation already and 3 months down payment,Now if ipa cancelled namin yon kc may nakita kaming ibang property sa ibang developer may makukuha pa ba kami sa binayad namin?
Hi Mary, it would really depend on what are the terms and conditions on the reservation agreement, and the contract. By the way, this is not yet covered by the Maceda law, Goodluck.
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God day,
Thank you for everything Mr. Jay, more power po! first time ko pong mag leave ng message dito. Because of your blog marami po akong nalaman na di ko alam before and thanks God itinuro po nya ang website mo sa akin.
God Bless po!
Hi Julz, thank you for the kind words! I’m glad to be of help. May God also bless you and your family.
Good day.
Thank you Mr.Jay for your help I’ll update you n lang po sa status kc my binayaran n kaming 65k sa kanila at nakalagay kasi dun na hdmf mis fee etc. So ipinaclaclarify ko na lang po sa kanila un.
Thanks a lot Mr. Jay
@Kate, usually ang buyer talaga ang magbabayad ng DST. In your case, kung iba-base natin sa selling price(SP), yung DST mo should be 0.015 x P747,000 = P11,205. But since ang sinisingil sayo is only P5,345, mukhang binayaran na yata nung developer ang kalahati. Hindi naman pwedeng mas mababa ang zonal value kasi nga and DST is 1.5% of the Selling Price (SP) or Zonal Value (ZV), whichever is HIGHER. Anyway, good deal pa rin yan for you. Thanks for the question and let me know if you need further clarifications.
@Dan, you’re welcome! Thank you also for the kind words, I’ll be answering you e-mail soon, medyo mahaba lang…
Sir Jay,
Thank you for everything sir Jay, more power po! Marami talagang natutulungan at naiinspire ang blog na ‘to…
regards,
dan
Good day,
Mr. Jay ask ko lang po kapag po bumili ka ba ng bahay thru pag-ibig sa isang developer ikaw po ba ang magbabayad ng stamp tax? sinisingil po kami ng developer worth 5,345 something ang value po ng bahay ay P 747,000.00 in magalang pampanga.At di lang po yun babayaran dum daw po namin sila ng insurance kasi nagbayad n daw sila sa pag ibig pero ung nagpaparint kami wala naman nakalagay na bayad na ung insurance.Sana po matulungan niob po kami dito salamat po ng marami
Thank you very much po
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You’re welcome rumposts, nice to see you again. Actually I’m very thankful to my wife as she really is the tax expert. =)
mr jay thank you very much for keeping us updated.