- What is Stamp Duty?
- What are Property Registration Fees?
- Stamp Duty and Property Registration Fees and Charges 2023
- Documents Required for Stamp Duty
- How to Pay Stamp Duty and Registration Charges in India?
- Factors that Determine Stamp Duty Charges
- How to Save on Stamp Duty Charges?
- Tax Benefit on Stamp Duty & Registration Charges of a Property
- Frequently Asked Question
Buying a property is one of the most significant financial decisions you will ever make in your life. However, apart from the price quoted by the seller, you will also have to pay some additional charges to complete the legal formalities of transferring the ownership of the property to your name. These charges include stamp duty and registration fees, which are levied by the state government on the documents that are used to establish the rights and liabilities of the parties involved in the transaction.
What is Stamp Duty?
Stamp duty is a mandatory fee imposed by the state government when transferring ownership of a property to another individual. It is charged on the registration documents required for property registration. The payment of stamp duty is a legal requirement under section 3 of the Indian Stamp Act 1899. The amount of stamp duty may vary from one state to another. The state government collects the stamp duty as a means of validating the registration agreement. By paying the stamp duty, you obtain a registration document that serves as legal proof of your ownership in court. It is crucial to ensure that the full stamp duty charge is paid. In India, the stamp duty charges are typically in the range of 5%-7% of the property’s market value for most states.
Understand: What is Stamp Duty on Mutual Funds?
What are Property Registration Fees?
The registration fee is an additional charge that the buyer must pay in addition to the stamp duty when registering the property in their name. This fee is calculated as a percentage of the total cost of the property, typically around 1% of the property’s value or market value, depending on the property’s location. The specific registration charges are determined by state laws, which means that the limits for these charges can vary.
Stamp Duty and Property Registration Fees and Charges 2023
|States||Stamp Duty Charges||Registration Fees|
|Bihar||Male to Female: 5.70%|
Female to Male: 6.30%
Other Cases: 6%
|Goa||Up to Rs 50 lakh – 3.5%|
Rs 50 – Rs 75 lakh – 4%
Rs 75 – Rs 1 crore – 4.5%
Over Rs 1 crore – 5%
|Gujarat||4.90%||1%, No charges for female|
|Haryana||Male (urban areas): 7%|
Female (urban areas): 6%
|Upto Rs 50,000|
|Jammu and Kashmir||5%||NA|
|Karnataka||Less than Rs 20 Lakh – 2%|
Rs 21 – 45 Lakh – 3%
Above Rs 45 Lakh – 4%
|Sikkim||4% + 1% (in case of Sikkimese origin)|
9% + 1% (for others)
|Uttar Pradesh||Male: 7%|
Female: 7% – Rs 10,000
|West Bengal||Upto Rs 1 crore: 6%|
Above Rs 1 crore: 7%
Note: Stamp duty and registration charges are as of June 2023 and these charges may vary from time to time.
Documents Required for Stamp Duty
The following are the documents required for stamp duty registration:
- Sale agreement
- Sale deed
- Khata certificate
- Photocopy of society share certificate and society registration certificate (in case of housing project)
- NOC from the apartment association (in case of housing project)
- Sanctioned building plan (under-construction property)
- Builder-buyer agreement (under-construction property)
- Possession letter from the builder (under-construction property)
- Title documents of the land owner (in case of land purchase)
- Records of Rights and Tenancy Corps or 7/12 extract (in case of land purchase)
- Conversion order (in case of land purchase)
- Tax-paid receipts for the last 3 months
- Registered development agreement (in case of joint development property)
- Power of attorney/s (if applicable)
- Joint development agreement between the land owner and builder (in case of joint development property)
- Copies of all registered agreements (in case of resale property)
- Latest bank statements in case of any outstanding loan amount
- Encumbrance certificate
How to Pay Stamp Duty and Registration Charges in India?
Stamp duty can be paid through the following methods:
- Stamp Paper: The traditional method involves purchasing stamp paper from an authorized vendor and having the agreement terms printed on it. Both the buyer and seller sign the document, and within four months of signing, the buyer should register the property under their name.
- E-stamping: E-stamping enables online payment of stamp duty through a computer-based process. The Stock Holding Corporation of India Limited (SHCIL) serves as the Central Record Keeping Agency for e-stamping. After applying and paying the stamp duty, users receive an e-stamp certificate with a unique Certificate Number (UIN) that can be downloaded and used for future reference.
- Franking: Franking involves getting the documents stamped. The agreement is printed on plain paper and taken to a bank or a franking centre. The documents are verified, and the stamp duty is paid. Once the payment is successful, the authorities stamp the papers. After franking, both the buyer and seller can sign the documents. Alternatively, pre-printed stamp papers that have already undergone the stamping process can be purchased.
Factors that Determine Stamp Duty Charges
The following are the factors that determine stamp duty charges:
- Age of the Property: Stamp duty charges are influenced by the age of the property. Older buildings generally attract lower stamp duty charges due to potential depreciation in market value.
- Age of the Owner: Senior citizens may be eligible for subsidized stamp duty charges in many states, considering their age.
- Gender of the Owner: Women often receive a discount on stamp duty charges when the property is registered in their name. Men may incur additional charges compared to women.
- Purpose: Commercial buildings usually have higher stamp duty fees compared to residential buildings due to additional amenities, floor space, and security requirements.
- Location: Stamp duty charges can vary based on the property’s location. Municipal localities and upscale urban areas tend to have higher stamp duty rates, while properties located in Panchayat limits or outskirts of towns may have lower charges.
- Amenities: The government may charge extra for specific amenities present on the property. Over 20 amenities, such as lifts, swimming pools, libraries, clubs, gyms, community halls, and sports areas, may incur additional stamp duty fees during property registration.
How to Save on Stamp Duty Charges?
Here are some tips on how to save on stamp duty charges:
- Registration in a woman’s name: Some states offer significant discounts on stamp duty for female property buyers. Consider purchasing the property in the name of a female family member to take advantage of these discounts. Compare stamp duty charges in different locations to find the lowest value.
- Projects with lower amenities: Housing projects without premium amenities generally have lower stamp duty charges. If you don’t require these facilities, it might be better to invest in projects with fewer amenities.
- Rural areas: In certain states, urban property buyers have to pay higher stamp duty compared to buyers in rural areas. If the property is primarily for residential use, consider purchasing in areas outside municipal limits to save on stamp duty costs.
- Exemption for affordable housing: There have been calls for exempting affordable housing from stamp duty charges. If this exemption is implemented, buyers in this segment can save a significant amount.
- Look for projects offering stamp duty waivers: Many developers offer to waive the stamp duty to attract buyers and boost sales. It can be beneficial to take advantage of such offers but ensure you carefully evaluate all aspects of the purchase.
- Be cautious of indirect charges: Sometimes, developers may agree to bear the stamp duty and registration charges but may include them indirectly in other ways. Be vigilant and ensure you are not being charged indirectly for these expenses.
Tax Benefit on Stamp Duty & Registration Charges of a Property
Section 80C of the Income Tax Act 1961 allows for deductions on expenses related to stamp duty, registration charges, and other transfer-related expenses. The maximum deduction permitted under this section is limited to Rs.1,50,000.
In case of joint property ownership, each co-owner can claim their share of expenses, including stamp duty and registration charges, in their individual income tax returns. However, it’s important to note that the maximum limit of Rs. 1,50,000 available under section 80C still applies.
Frequently Asked Question
No, the home loan doesn’t include the stamp duty and registration charges. Home buyers are responsible for arranging the funds for stamp duty and registration charges on their own, as these expenses are typically not factored in by banks when evaluating the overall cost of the property.
Underreporting the property price in the agreement is a common tactic used to save on stamp duty. However, this practice results in revenue loss for the government due to tax evasion. If you are found to have paid insufficient stamp duty, you may face severe penalties. The specific penalties for stamp duty evasion vary from state to state but can range from 8% – 20% of the actual stamp duty, along with potential imprisonment according to the state’s regulations.
No, stamp duty charges in India are not refundable.