stamp duty

What are stamp duty charges & rates on a property purchase?

Section 3 of the Indian Stamp Act (1899) mandates that paperwork related to property transfer must have a government stamp to be admissible in court. As the charges for this stamp duty are not under the purview of a home loan, a borrower should adequately measure the additional expenditure in this regard. In this regard, an applicant can use a stamp duty calculator to get the precise amount he/she will need to pay for this purpose.

What is stamp duty?

When the legal ownership of a property is transferred to a buyer from a seller, the state government where the property is located levies a tax against it. If a homebuyer pays off this tax under a stipulated period, government bodies will provide a stamp mark on the records and documents related to the property purchase to legally validate the proceedings.

Once the stamp duty has been submitted, a buyer must also register the property-related papers within four months. Much like the stamp duty charges, the buyer will have to pay a registration fee for this purpose that is not covered by a sanctioned home loan amount.

What is the stamp duty rate on property purchases?

As the state governments levy these taxation charges differently, there is no uniform amount a homebuyer will have to pay across India. However, government authorities generally charge stamp duty at a rate ranging from 3% to 10% of the current appraised market value of a property.

Notably, several variables play a crucial role in determining the amount an individual will have to pay for this tax. These include:

  • Age:

    Stamp duty rate is lowered for senior citizens.

  • Gender:

    Women homebuyers need to pay a discounted amount for stamp duty in some states

  • Property’s age:

    An older property attracts lowered stamp duty expense

  • Type of property:

    An individual will pay higher taxation charges for stamp duty for commercial housing when compared to a residential alternative.

  • Location of the property:

    Housing in municipal or suburban areas will cost more stamp duty than on city and town outskirts.

How to calculate the stamp duty payable for a property?

An individual can calculate the stamp duty charges he/she needs to pay by following these simple steps:

Step 1:

Open the website of the financial institution providing a home loan

Step 2:

Locate ‘Stamp Duty Calculator’ on the site

Step 3:

Select the state where the property in question is located at

Step 4:

Set the present market value of this property

Consequently, this calculator will show the amount a borrower will be paying for as stamp duty alongside the taxation rate for this purpose in his/her respective state.

Having a fair idea about stamp duty charges and other home loan fees enables a borrower to calculate the monetary outgo to purchase a home. Additionally, understanding the eligibility criteria helps an individual know the total cost of borrowing a home loan.

Notably, leading financial institutions extend pre-approved offers to their existing clients for home loans and LAP if they meet these parameters. Therefore, a borrower can easily check the available pre-approved offers by entering his or her name and contact details in a lender’s portal.

Which documents are required for stamp duty charges?

When paying stamp duty, a borrower must keep the documents mentioned below within reach to expedite the procedure. Notably, depending on the property type, the documents required can vary. Some of the basic documents required are as follows:

  • Sale agreement and deed
  • Khata Certificate
  • Society share certificate
  • Society registration certificate
  • No Objection Certificate from apartment association
  • Sanctioned building plan
  • Builder-buyer agreement
  • Possession letter from builder
  • Title documents
  • Bank statements
  • Tax returns
  • Encumbrance certificate, etc.

What are the different methods of stamp duty payment?

A homebuyer can pay this charge via different means, such as:

  • E-Stamping
  • Franking
  • Physical stamp paper

Per the regulations, a buyer must pay off the stamp duty charges before or within the next working day of signing the sale agreement. Notably, any delay in paying this tax can lead to an additional fee charged as a penalty.

Are there any tax benefits available on stamp duty charges?

Provisions under Section 80 of Income Tax Act (1961) allow a borrower to claim a tax exemption of up to Rs. 1.5 Lakh for stamp duty and registration fee.

Therefore, a borrower can use the stamp duty calculator to determine whether he or she is eligible for this reimbursement and plan their repayment schedule for a home loan accordingly.



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