Buying a property involves a lot of paperwork and expenses, starting from owner transfer to registration and paying stamp duty. But following these steps is vital; after all, these papers are evidence of property ownership.
As a smart buyer, you should understand the government’s legal procedures. Stamp duty and Registration charges are a piece of proof and authentication that you are the proprietor of the property. The state government decides these charges, and it varies as per the property value and type of property.
What is Stamp Duty for Property Purchase?
Stamp duty is a direct tax that the government of India assesses. It is mandated to pay this amount on all financial transactions under Section 3 of the Stamp Duty Act, 1899. Some examples of this are letters of credit, promissory notes, bills of exchange, property transactions, etc.
When buying a property, you are legally bound to pay these charges to get legal ownership of the property.
Now, you must be wondering who collects this. As land is divided by state, the rules and regulations regarding stamp duty and registration charges are created by the state government.
Most states now offer the option for land buyers to pay this charge online. So, you no longer have to stand in a long queue to make the payment or get information about the charges.
Stamp Duty Act
The Indian stamp act came into effect in 1899. The purpose of the Act is to collect the correct stamp duty on any document or conveyance for which it is due. It is applied to sale deeds based on the property’s real market worth rather than the value stated in the transfer. As a result, the Authority has a duty to accurately determine its genuine value.
The Indian Stamp Act, 1899 is a fiscal statute that establishes the rules for taxation on instruments used to record transactions. Stamp duties are imposed by the Union on the instruments listed in Entry 91 of the Union List, including bills of exchange, checks, promissory notes, bills of lading, letters of credit, insurance policies, transfers of shares, debentures, proxies, and receipts.
Factors Affecting Stamp Duty And Registration Charges
There are a few factors considering which the stamp duty and registration charges are levied are-
- Age of the property
- Usage of property
- Type of property, if it is residential or commercial
- Project Amenities
- Location of the property
- Male or Female who wants to get the ownership of the property
Stamp duty increases the cost of the property significantly, but it is essential as it gives ownership proof. You need to keep in mind these charges while doing financial planning for buying a property. You can also use a calculator for the same to know the exact charges as per your property and location.
Stamp Duty Payment
stamp duty payment is determined based on the property value at the time of registration. The amount varies by state as well as the age of the property—new or old. It’s important to have a good notion before you finalise your property deal because it adds up to the cost of the property.
A legal tax that must be paid in full, stamp duty serves as documentation for each sale or acquisition of real estate. Since each state is responsible for levying its own stamp duty, each state has a different pricing structure. On a list of specific instruments, the Centre imposes stamp duty and also sets the rates for these instruments.
Stamp Duty Charges
Depending on the type of document, it may be a fixed price or levied as a percentage of the declared agreement value. Various types of papers have different stamp duties, which are not consistent across all states. For instance, while registering a property document, stamp duty charges are applied to the higher the transaction value or the circular rate (the government’s set minimum price for the property).
Additionally, it could change based on the gender of the owner. For instance, in New Delhi, a woman must pay 4% of the stamp duty while a man must pay 6%. There are several factors that determine how much your charges will be. These are some of the determining factors:
- Age of Property: The amount of stamp duty you will have to pay is heavily influenced by the age of the property. Because fees are computed as a percentage of the property’s total market value, older structures often have lower fees while newer structures have higher fees.
- Age of Owner: For senior individuals, almost all state governments provide subsidised stamp duty fees. Therefore, the owner’s age has a significant bearing on the fee.
- Purpose of the Building: Compared to residential structures, commercial buildings are subject to higher fees. This is mostly due to the numerous services, square footage, and security requirements for commercial buildings.
- Gender of Owner: If the property is registered in the name of a woman, she will also receive a discount on stamp duty fees, just like senior persons do. When compared to women, men spend around 2% more money getting their property registration documents stamped.
Stamp Duty on Property Registration
Registration of a property can be more expensive than purchasing one. If you’re thinking about purchasing a house, keep in mind that the price the seller offered you may not represent the total cost. You will have to stamp duty on property registration. When you register it in your name, the price that was stated to you is likely to increase by a few lakhs.
It is necessary to provide legal proof of property ownership or transfer. In the end, the buyer typically needs to register their name in the local government records. At the time of registration, the buyer is required to pay stamp duty. From one state to another, stamp duty rates may differ. The amount of stamp duty also differs according to how recent the property is.
Did you know that when you choose a property, you will be required to pay stamp duty, registration fees, cess, and surcharges? Yes, the overall cost of the charges might equal or exceed 7% to 10% of the property’s total market value. In the majority of Indian states, stamp duties range from 5% to 7% of the property’s total market value, while registration fees range from 1% to 2%.
Documents Required for Stamp Duty
Immovable property transfers can only be made through registration. There are numerous advantages to registering a transfer of movable property document. The following papers must be delivered to the Registrar in order to register property.
- Evidence of ownership
– Certified copy of the original old selling deed or the MC or mutation assessment
- Identification documentation
– Ration cards, voter identification, licences, identity cards, Aadhaar cards, and PAN cards
- Verification of GPA from the state where it was registered, if it was done so only
- ID evidence from two witnesses
- Description of immovable property and a map plan
- Digital image of the subject property (building or plot)
- Regarding a release deed: Identification of the ancestral trait using virasat mutation.
Stamp Duty Rates in the Various Indian States
Different states in India have different stamp duty and registration charges. We have compiled a list of all the major states in India and their stamp duty and registration charges.
|Haryana||12.5% of the consideration|
|Assam||8% of the consideration|
|Goa, Daman and Diu||8% of the consideration|
|Chattisgarh||7.5% of the market value|
|Punjab||6% of the consideration|
|Tamil Nadu||8% of the consideration|
|Rajasthan||11% of the market value|
|Uttar Pradesh||8% of the market value|
|Delhi||3% stamp duty+5% surcharges|
|Kerala||8.5% of the consideration|
|Meghalaya||4.6 % (up to Rs.50,000) of consideration|
6 % (Rs.50,000 to Rs.90,000) of consideration
8% (Rs.90,000 to Rs.1,50,000) of consideration
9.9% (above Rs.1,50,000) of consideration
|Bihar||7% + 2% duty on transfer|
|Maharashtra||10% of market value|
|Karnataka||10% of market value|
|Tripura||5% of the consideration|
To establish your ownership of the property in court, you will need registration paperwork with stamp duty paid tag on it. One cannot legally claim ownership of the property without paying the required amount and registration charges. Therefore, it is crucial to pay the entire amount and registration charges while buying a property. You can check your stamp duty and registration charges using a calculator. All you need to do is put in your required credentials in the stamp duty calculator and click on calculate. We will discuss how to calculate these charges using a calculator in the next section.
|Delhi||1% of the deal value|
|Mumbai||1% of the property value|
|Chennai||1% to 4% of the property value|
|Kolkata||1% of the total property value|
|Uttar Pradesh||1% of the total property value|
|Uttarakhand||1% of the total property value|
How are Stamp Duty and Registration Charges Calculated?
The stamp duty and registration cost are generally 5-7% and 1% of the property’s market value respectively. They might seem like small percentages but when calculated they can run into lakhs of rupees. To avoid any shortfall in funds, ensure that you requisition stamp duty and registration charges when applying for a home loan. One thing to keep in mind is that the duty and registration charges are not included in the home loan amount sanctioned by lenders.
You should be aware that state-to-state variations in stamp duty and registration charges for property registration exist. The type of structure or site involved is one of several factors that the authorities take into account when determining fees. As was already indicated, a number of factors play a role in determining how much stamp duty and registration charges you’ll have to pay. Additionally, you can use a calculator to calculate how much you need to pay exactly.
Stamp Duty Calculator:
Consider utilising one of the many online stamp duty calculators accessible if you want to figure out the stamp duty charge you will be required to pay. With a stamp duty calculator, you’ll be able to quickly estimate how much money you’ll need to register your property. You only need to:
- To see the payable amount, enter some basic details about your property, such as the state it is located in and its overall worth, and then click the “Calculate” button.
- If you want to calculate the registration fees, you can do so online using a property registration fee calculator.
- The sum you’ll need to register your property is calculated by adding cess and fees.
- Stamp duty charges are usually around 3% to 9% of the property value, and you can pay stamp duty online and offline, both at your convenience.
- If you do not pay stamp duty within the time frame, you will be levied a penalty of 2% per month, with a maximum penalty of 200 % of the remaining amount.
- There is a standard 1% charge across states for registration fees. A few states charge a flat fee on property registration, such as Haryana and Maharashtra.
This was about stamp duty and registration charges. As the charges are different in the states, you can calculate the exact amount by using the stamp duty calculator. On the property, it is calculated by taking into consideration the market value or reckoned rate or the circle rate, whichever is higher.
Paying stamp duty should not be taken as a liability; instead, it should be considered as one of our many duties as civil people. Please note that the documents required for it vary from state to state, so please check the list before making stamp duty payments.
A1. Both seller and buyer ought to share the stamp duty equally. So, the complete burden is not just on the buyer, but the seller is also responsible for sharing half of the amount.
A2. If you purchase an apartment, the stamp duty is charged per your property share. This implies that if the property is 1,00,000 sq. ft and the units are sold to 10 people, every person will need to pay for 10,000 sq. ft.
A3. Only women get a waiver in some cities on stamp duty. But, at times, there are schemes when the developers give the complete waiver to the buyers to attract more customers. Do not think they will not have to pay the government; it just means that the seller will bear the complete stamp duty charges.
A4. If you want to gift property, then it should meet the following criteria as per Indian laws-
The property should be tangible
It can be both movable or an immovable property
A5. Although it depends on the state, a few states give discounts to senior citizens on the stamp duty amount.
Yes! Under section 80C of the Income Tax Act of 1961, a buyer may deduct the stamp duty and registration expenses from their taxes.
No, these charges are non-refundable
No, Under the GST on real estate regime, the registration and stamp duty fees are unaffected.
The procedure to pay this is different in different states. It can be paid online as well as offline.
Stamp duty is due prior to the document’s execution, on the day of the document’s execution, or the following working day after that.
Residential, commercial, and freehold or leasehold property transactions are all subject to stamp duty. Section 3 of the Indian Stamp Act of 1899 lays down the provisions for stamp duty applicability.
In certain cities like Delhi and Gurgaon, the stamp duty charges are different for women. this is done to promote women home buyers. In Delhi, stamp duty charges for women are 4%.
No, banks do not calculate this and registration charges when they are calculating the home loan amount.
Yes, buyers can pay their stamp duties online.
Also Read: Deferred Tax Liability & PPF Tax Exemption