How Stamp Duty and Registration Charges are Calculated on Property?
Millions share the dream of buying a house in India. Given the high property prices in most parts of the country, a home purchase is now treated together as the foremost important financial achievements. for many people, this dream is achieved with the assistance of a home loan. If you’re eligible for a home loan, your lender might approve a loan of 70%-85% of the property value. The remaining 40%-20% must be arranged by you. But except property cost, a buyer also must consider a bunch of additional expenses that accompany a property purchase. Two of the foremost important of them are stamp duty and registration charges.
If you’re getting to purchase a property anytime soon, you want to attempt to know the maximum amount about them as possible. this might assist you to form sure that you simply have adequate funds to manage these additional expenses and fulfill your dream of buying a property.
What is Stamp Duty?
Stamp duty may be a tax levied on any sort of transaction that takes place and is documented. stamp duty may include a conveyance deed, sale deed, power of attorney, etc. it’s a tax that’s purchased acquiring any document or instrument that facilitates the creation, transfer, limiting, extending, extinguishing, or recording any right or liability. stamp duty started after the passing of the Indian Stamp Act in 1899. After it’s paid, these documents or instruments become legally valid and have evidentiary value during a court of law.
How Stamp Duty is Calculated?
Stamp duty calculation relies on the price of the property. Each Indian state has its own criteria supported which it’s calculated. it’s generally paid on the thought of the circle rate that’s determined by a government. stamp duty also varies on the premise of the sort of property i.e. residential or commercial, also as for urban and rural areas.
There are 3 ways within which you’ll pay stamp duty for the new property you’re on the brink of own. you’ll consider payment through non-judicial stamp paper, e-stamping, or franking, that’s you pay the duty through some franking agency or a bank that’s authorized to easily accept such a payment. Franking does involve some extra charges supported by the state you’re purchasing the property in.
Also, there are several other factors that are taken into consideration for calculating stamp duty charges. The important points are-
- Property status (new or old)
- Property area (metropolitan, rural, suburban, etc.)
- Property location (even within a state, the charges can vary between cities and locations)
- Owner age (some states have discounts for senior citizens)
- Owner gender (some states offer a concession to female owners)
- Property usage (commercial or residential)
- Property type (independent house or flat)
While stamp duty is a fee that states charge supported the transaction value, the registration charge is that the cost users pay money for the service of putting a contract or a deed in government’s records. In simple words, the govt. maintains a registry of documents reciprocally for a fee. To an extent, this process lends inviolability to papers that will otherwise not be legally binding in nature.
The Indian Registration Act, 1908, talks about the way within which registration of documents should happen.
Stamp Duty for Women:
In order to push property ownership among women, several states charge lower duty, when a house is being registered within the name of a lady. within the capital, as an example, women buyers pay only 4% as stamp duty in Delhi on property purchase, while the stamp duty rate is 6% for men. Lower rates also are offered, just in case, the house is registered jointly, with the ladies being the first co-owner.
However, not all states offer this rebate to women. In Maharashtra, as an example, men and ladies both got to pay similar charges. an equivalent is true of Kerala, Bihar, and Jharkhand. In UP also, women enjoy the tenth discount thereon on the condition that the worth of the property must not exceed Rs 10 lakhs.
Factors Determining Stamp Duty Charges:
- Age of the Property: The age of the property plays a crucial role in determining the stamp tax charges you’ll be required to pay. As it’s charges are calculated as a percentage of the whole market value of the property, old buildings usually attract less stamp duty charges and new buildings attract a high charge. this is often actually because the market value of old buildings would have depreciated.
- Age of the Owner: most state governments have subsidized stamp duty charges for senior citizens. So, the age of the owner plays an important role in determining the charge.
- Gender of the Owner: Like senior citizens, women in our country also get a discount on stamp duty charges if the property is registered in her name. Men pay about 2% extra to urge their property registration documents stamped as compared to women.
- Purpose: Commercial buildings attract a high stamp duty fee as compared to residential buildings. this is often mainly because commercial buildings need plenty of amenities, floor space, and security measures.
- Location: If your Property is found during a municipal locality or an upscale urban area, be prepared to pay high stamp duty. If your property is found in Panchayat limits or outskirts of the town, you’ll finally find yourself paying less to urge it stamped.
- Amenities: Did you recognize that the govt. will charge you for every extra amenity you’ve got on your premises while registering the property? Yes, the govt. features an inventory of over 20 amenities that you simply will get to pay extra for if you’ve got them on your property. a number of the amenities are lifted, swimming pool, library, club, gym, community hall, and sports area.
