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Stamp Duty and Registration Fees in India

Stamp Duty and Registration Fees in India

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Stamp Duty and Registration Fees in India


Introduction

In this blog post, we explore India’s stamp duty and registration costs for the benefit of interested readers.

 

What is stamp duty?

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Stamp duty is a tax that is assessed on one-time real estate transactions or legal papers. Before a document could be used lawfully, a physical revenue stamp had to be affixed to it or imprinted on it to demonstrate that stamp duty had been paid. The physical stamp is no longer necessary for more recent iterations of the tax.

You will be required to pay property stamp duty when transferring the title of your property to another individual. The state government charges this cost for the paperwork required to register your property. States have different stamp taxes and registration fees. Section 3 of the Indian Stamp Act, 1899, makes it necessary for you to pay stamp duty while registering a property.

To put it another way, a stamp duty is a charge that the government levies on specific legal documents, typically those that involve the transfer of real estate or other assets.

 

Stamp duty and registration charges in different cities across India

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A property may cost more to register than it does to buy. If you’re considering buying a house, keep in mind that the price the seller gave you may not be an accurate representation of the final cost. When you register it in your name, the price we told you will most likely increase by a few lakhs.

Did you know that you would have to pay stamp duty, registration fees, cess, and surcharges while choosing a property? Yes, the overall cost of the fees may be between 7% and 10% of the total market value of the property. The majority of Indian states charge registration fees between 1% and 2% and stamp taxes between 5% and 7% of the property’s total market value.

Stamp duty is collected by the state government to certify your registration agreement. You will want registration documentation with a stamp duty-paid tag on it in order to prove your ownership of the property in court. Without paying the necessary stamp duty, it is not possible to lawfully claim possession of the property. Therefore, it is crucial to pay the entire stamp duty payment.

The stamp duty and registration fees in various Indian cities are listed below.

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City Stamp Duty Charges Registration Charges
Bengaluru 2% to 5% 1% of the property value
Delhi 4% to 6% 1% of the deal value
Mumbai 3% to 6% 1% of the property value
Chennai 1% to 7% 1% to 4% of the property value
Kolkata 5% to 7% 1% of the total property value
Gujarat 4.9% 1% of the total property value
Kerala 8% 1% of the total property value
Maharashtra 5% 1% of the total property value
Tamil Nadu 7% 1% of the total property value
Uttar Pradesh 7% 1% of the total property value
West Bengal 7% to 8% 1% of the total property value
Rajasthan 5% to 6% 1% of the total property value
Telengana 5% 1% of the total property value
Uttarakhand 5% 1% of the total property value

 

Factors that determine your stamp duty charges

Age of the property: The age of the property has a significant impact on the amount of stamp duty you will be required to pay. Older buildings often have lower fees, whereas newer buildings typically have higher rates since stamp duty fees are calculated as a proportion of the property’s total market value. This is because older structures would no longer have as much market value.

Age of the owner: The majority of state governments provide senior citizens discounts on stamp duties. Therefore, the owner’s age has a significant bearing on the fee.

Gender of the owner: If the property is registered in the name of a woman, she will receive the same reduction in stamp duty rates as seniors do in our country. Men spend about 2% more money getting their property registration documents stamped than women do.

Purpose: Commercial structures are subject to greater stamp duty fees when compared to residential ones. The multiple services, space needs, and security requirements for commercial buildings are mostly to blame for this.

Location: Be prepared to pay a high stamp duty if your property is situated in an upscale urban neighborhood or a municipal district. You will pay less to have your property stamped if it is situated within the boundaries of a panchayat or on the outskirts of a town.

Amenities: Did you know that when you register a property, the government will tax you for any additional amenities you have? Yes, the government has a list of more than 20 facilities that, if present in your home, may incur additional costs. Lifts, a pool, a library, a club, a gym, a community center, and a sports area are just a few of the attractions.

 

How is stamp duty charges calculated?

As was already said, a variety of variables affect the amount of stamp duty you will be required to pay. The formulas below are used to calculate the stamp duty fee:

First, the total market value of the property is taken into account. You will end up paying a large fee if the market value of your property is high, and vice versa. If the property has both a market value and an agreement value, the higher of the two will be charged.

In addition to the price or value of the property, other factors that affect the property registration fee and stamp duty costs include the property’s kind, location, owner’s gender and age, its use, and the number of floors.

The Stamp Duty Ready Reckoner is typically used by stamp duty officials to determine the value of the property. Every year on January 1st, the relevant state government releases the Stamp Duty Ready Reckoner.

 

Stamp duty calculator

If you want to calculate the stamp duty fee you will have to pay, think about using one of the many online calculators available. The amount of money you’ll need to register your property can be promptly estimated. You just have to:

Enter some basic information about your property, such as the state it is in and its total worth, and then click the “Calculate” button to get your response.

You can use a property registration fee calculator online to figure out the registration costs.

When taxes and fees are included, the total amount needed to register your property is determined.

Going to the neighborhood property registrar’s office will allow you to find out if you are permitted to use an online calculator.

 

Documentation required for payment of stamp duty and registration fees

  • Sale deed in the name of the seller
  • Khata certificate
  • Bruhat Bangalore Mahanagara Palike (BBMP) extract certificate (only for residents of Bengaluru)
  • Tax paid receipts of the last three months
  • Registered development agreement (if in case of joint development property)
  • Power of attorney/s if any
  • Joint development agreement, general power of attorney (GPA), and Sharing/supplementary agreement, between land owner and builder
  • A copy of all registered previous agreements (in case of re-sale property)
  • Records of Rights and Tenancy Corps (RTC) or 7/12 extract
  • Conversion Order issued by the concerned authority
  • Latest bank statements in case of any outstanding loan amount
  • Certificate of encumbrance up to current date
  • Sale agreement
  • Electricity bill 
  • No objection certificate (NOC) from Apartment Association
  • Sanctioned building plan
  • Occupancy/Possession certificate from builder
  • Title documents of land owner
  • Photocopy of Society share certificate and Society registration certificate

 

Process for paying registration and stamp duty fees

There are three options for paying stamp duty. These are what they are:

  • Physical stamp paper
  • Franking
  • E-stamping

You must keep in mind that not all states will use all three techniques. If all three options are available, you can pick the one that best meets your needs.

 

Purchase of physical stamp papers

This is the most conventional method of paying stamp duty and registration fees. In this case, you can buy non-judicial stamp paper from a licensed vendor. Papers with stamped impressions are known as “non-judicial stamp papers.” The transaction information can be scribbled or typed on the stamp paper once it has been purchased. Finding a supplier of these stamp papers is not an easy task. Additionally, this paper is frequently out of stock. You can need a lot of stamp papers if the amount of stamp duty that must be paid is high. Consequently, few people like this approach.

 

Franking

An authorized franking agent will use this procedure to stamp your document to show that the stamp duty has been paid. You should go to a licensed bank that will serve as a franking agent or a franking agency to deposit the stamp duty before you complete the transaction for which you must pay the stamp duty (usually, this will be before signing the document). A franking machine will be used to frank the document with a unique adhesive stamp after you have paid the stamp duty.

There will be a minimum amount required for franking in each state. The minimum franking fee, for instance, is 0.1% of the agreement value in Bengaluru. As a result, if you buy a house for Rs. 50 lakhs, you must pay 0.1%, or Rs. 5,000, in franking fees.

However, when you sign the selling document, this fee will be subtracted from the stamp duty. For example, if the sale deed’s stamp duty is 5.5%, you will only need to pay 5.4% of that amount because you have paid a 0.1% franking charge.

 

E-Stamping

The government introduced e-stamping to prevent fake stamp papers and make stamping simple. In some states, electronic stamping is necessary. E-stamping is basically Internet stamping. As the official vendor for e-stamping and the Central Record Keeping Agency for all of the e-stamps used in the nation, Stock Holding Corporation of India Limited (SHCIL) has been chosen.

The government implemented e-stamping in order to prevent the use of fake stamp papers and make stamping simple. E-stamping is mandated in some states. In essence, e-stamping is stamping done online. Stock Holding Corporation of India Limited (SHCIL) has been chosen as the authorized e-stamp vendor and serves as the central repository for all e-stamps used in the nation.

You can pay in a variety of ways, including using debit and credit cards, checks, demand draughts, and internet banking. You will receive the e-stamp certificate after paying the stamp duty. The issue date will be included in the certificate’s unique certificate number (UIN).

The convenience of e-stamping is a plus. Another advantage is that the UID number can be used to check the legitimacy of your e-stamp online. The problem with e-stamping, though, is that no duplicates of your e-stamp will be produced.

 

Registration of documents after paying stamp duty

The document must be registered with a sub-registrar under the Indian Registration Act once you have paid the stamp duty. If the transaction involves the purchase of real estate, the registrar shall be from the region where the property is located.

The primary goal of registration is to document the document’s execution. Only after it is registered does the document acquire legal status and, if applicable, transfers ownership to the appropriate owner.

 

Registration fee

In addition to the stamp duty, there is also the registration charge. Each state has a different cost. For instance, in Karnataka, the registration cost is set at 1% of the transaction’s value.

 

What happens, if you pay inadequate stamp duty?

Paying less stamp duty for your property is not legal. When registering your property, you must pay the correct stamp duty as required by law. Many people give their property a low market value in order to avoid paying expensive registration and stamp duty payments. 

However, it is not advised to do this. If you are discovered, you will be subject to severe fines and possibly even imprisonment. As a commercial builder, your reputation will also be on the line.

Visit the local property registrar’s office or get in touch with a licensed property consultant right away for additional information on stamp duty fees.

Let’s now examine some of the frequently asked questions regarding stamp duty and registration fees.

1. Are stamp duty charges refundable?

The cost of stamp duty is not refundable.

2. Can I claim stamp duty as tax deduction?

Yes, under Section 80C of the Income Tax Act, stamp duty is deducted from taxes up to a maximum of Rs. 1,50,000.

3. Is goods and services tax (GST) included in stamp duty?

Until recently, stamp duty and GST were two independent taxes assessed on real estate sales that had no bearing on one another.

4. Are stamp duty and registration charges covered by home loan?

The amount of a house loan that has been approved by a lender normally does not include stamp duty and registration expenses. The buyer is responsible for this out-of-pocket expense.

5. Which city has the maximum stamp duty charges in India?

The highest stamp duty rate in India is 9.5% in Madhya Pradesh.

We give an update on stamp duty and registration fees across India here before we draw a conclusion.

 

As of April 28, 2022, the Stamp Duty Amnesty Scheme might generate revenues of Rs. 1,500 crore.

The government’s amnesty program will assist people in paying the correct stamp duty. In some circumstances, a stamp duty waiver may be given in lieu of paying the full sum. 80,000 to 90,000 cases will benefit from the stamp duty relief, according to a state-wide assessment. According to the Maharashtra state government, the waiver would be given for any cases that are still open as of March 31, 2022.

 

The Gujarat government has noted increases in stamp duty and sale deeds as of April 7, 2022.

The Gujarat government reported a 43% increase in stamp duty in the fiscal year 2021–2022, reversing a two-year pattern of diminishing earnings from stamp duty. The real estate sector in the state has experienced tremendous expansion. In addition, the state has seen a 25% increase in sale deeds that were completed in the fiscal year 2021–2022. In the most recent fiscal year, the government received stamp duty payments of Rs. 10,606 crore.

 

As of April 5, 2022, stamp duty on property registrations has been raised in Mumbai and three other cities.

The Maharashtra government intends to resume collecting the 1% metro tax on real estate acquisitions in Mumbai, Nagpur, Thane, and Pune as of Friday, April 1, 2022. The choice was made in light of the state’s choice to eliminate all COVID-19 restrictions.

 

Circle rate and stamp duty exemptions were extended by West Bengal by six months as of March 15, 2022.

This year, the West Bengal state government has extended real estate incentives for an additional six months. The extended date is currently September 30, 2022. Stamp duty was exempt from payment in the amount of 2%, while the circle rate for real estate property was exempt from payment in the amount of 10% for the fiscal year 2021–2022, which has now been extended to March 31.

 

As of March 1, 2022, the real estate industry in Karnataka requests lower stamp duties and guidance values.

In order to hasten recovery from the pandemic-induced depression, the real estate industry anticipates that the Karnataka government will incorporate beneficial measures like lowering the stamp duty and guidance value. They call for three things: a set minimum selling price below which a house can be registered; a reduction in property rates by lowering the guideline value; and a reduction in stamp duty for all residential properties, regardless of price. For three months starting in January, the government reduced the guiding value by 10%.

The stamp duty for residential units valued between Rs. 20 lakh and Rs. 45 lakh was reduced from 5% to 3% last year. The previous budget decreased the stamp duty on apartments under Rs. 20 lakh to 2%.

 

As of January 31, 2022, West Bengal will reduce its stamp tax until the end of March due to the Omicron outbreak.

West Bengal’s real estate sector would experience tremendous expansion as a result of the state government’s decision to reduce stamp duty until the end of March. The third extension comes after a nationwide Omicron outbreak that led to lockdowns at the state level. The 10% interest rate relaxation and the 2% drop in stamp duty are likely to boost demand for residential properties.

Because of the clients’ ongoing purchases of residential houses at cheap loan rates and the fantastic offers offered by the real estate developers, Kolkata’s real estate market has maintained its growth momentum. Sources indicate that Greater Kolkata saw a total of 44,940 residential property units registered in 2021, representing a 64% increase from 2021. Of these units, 56% were registered after the stamp duty waiver in July last year.

The real estate sector has seen a spike in home registrations since November 2021. The state’s total home sales increased by 248% from month to month in December.

 

As of January 25, 2022, the Maharashtra government will raise the stamp tax by 1%.

The Maharashtra government is raising the stamp duty for registering homes by 1%. After the two-year exemption from stamp duty expires in March 2022, the current 5% rate will be increased to 6%. The current stamp duty for gifting real estate is Rs. 200. However, beginning in April 2022, gifts of immovable property will be subject to an ad valorem stamp duty of 1% based on the market value of the property.

 

Improvements to Kolkata’s stamp duty on property registrations as of January 24, 2022.

In and around Kolkata, there has been a 64% increase in property registrations year over year in 2021. This has increased the total to 44,940 units. Up to 56% of these units were registered after the July stamp duty reduction was implemented. However, the number of registrations may change, at least for the month of January 2022, as a result of the limits proposed in response to the COVID-19 issue.

 

Gujarat saw a 62% rise in government revenue from stamp duty and property registration as of January 7, 2022.

Gujarat has recorded a 62% increase in stamp duty and property registration revenue throughout the first three quarters of the current fiscal year compared to the same period last year. When comparing the number of properties registered between the months of April and December, there has also been an increase of 34%. Stamp duty and property registration revenue totaled Rs. 7,499 crore, and there were 9,95,809 registered properties.

 

As of January 5, 2022, the Rajasthan Finance Department will waive the stamp duty on apartments priced under Rs. 50 lakh.

A relief plan for the Registration and Stamps Department was approved by the chief minister of Rajasthan, and it is in force from 1 January to 31 March 2022. All pending cases will be resolved, and you will be exempt from paying interest on stamp duty. The proposal to extend the 2% stamp duty reduction period on sale documents through the end of March 2022 has been accepted.

Conclusion

Stamp duty is often a levy levied by the government on real estate transactions. It is insufficient to simply have physical possession of real estate, such as a house. Additionally, you must have documentation proving your legal possession of the property, for which you must pay stamp duty and registration costs. 

According to the constitutional framework, the state government is in charge of levying and collecting stamp duty, which varies from state to state. Additionally, stamp duty is computed depending on the valuation of the property, which is established by factors such as the property’s type (residential or commercial), age, and location. When buying a home, it is essential to comprehend and incorporate it into your financial planning architecture because it raises the entire property cost.

Therefore, we must pay stamp duty, registration fees, taxes, and surcharges when we purchase a home or other property. Yes, the total cost of the fees may equal, if not exceed, 7% to 10% of the property’s total market value. In most Indian states, stamp duty is between 5% and 7% of the total market value of the property, while registration costs are between 1% and 2%.

It’s important to keep in mind that it could be challenging to prove ownership if your name doesn’t appear on official documents as the owner of a certain piece of land. As a result, the buyer is required to register the property.

Additionally, even if the owner is in possession of the property, they run the risk of losing it because unregistered properties have no legal standing. If the government were to purchase this property at some point in the future for the purpose of carrying out an infrastructure project, the owner would not be entitled to compensation. You could be at risk if you don’t register a property purchase agreement. Paying the appropriate stamp duty and registration costs becomes important in this situation.

All of the eager readers who are interested in learning the fundamentals of stamp duty and registration costs in India might find this blog to their advantage, we hope.

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