All You Need to Know About Stamp Duty in India

by Godrej Properties Limited

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Buying a house is no small affair. From identifying the right property to investing money, purchasing a property can be one of the most complicated investments ever. Stamp duty is one of the most important factors to consider in the purchase process of a property in India. However, it so happens that many home buyers are not aware of stamp duties, stamp duty acts, or anything remotely relevant to stamp duty on property. So what is stamp duty, and why is it so important? In simpler terms, it is a legal requirement to pay certain registration and stamp duty charges while purchasing a property so that the entire transaction is legally valid. Now, let’s get a deeper understanding of what a stamp duty entails in the context of purchasing a property in India:

What is stamp duty?

It is legal evidence of ownership of a property, be it a house, an apartment, or a piece of land.

Under Section 3 of the Indian Stamp Act of 1899, stamp duty is the amount payable during the purchase of a property which is a percentage of the entire transaction value. During the registration, the actual stamp duty value is calculated as per the property’s value. Stamp duty is a tax levied by the Indian government to verify the transaction, including deeds, agreements, contracts, and every other instrument corresponding to the transaction.

So, why registration and stamp duty are important? Because it validates the documents involved in the property purchase and acts as an evidentiary support system during disputes related to the ownership of the purchased property if they were to arise. Any document not properly stamped cannot be obtained as evidence in court. Also, stamp duty rates in India are based on the market value of the purchased property, so it also validates the fact that the property is priced fairly.

In conclusion, full payment of stamp duty value or land registration charges during the purchase of a property in India ensures fair evaluation of the property and legal validity of the purchase process.

Where to get property stamp paper?

The availability of stamp papers more or less differs from state to state. While in some states, you can procure stamp paper through courts or government-authorized stamp vendors, in others, now the Government of India has started a dedicated online portal (SHCIL – https://www.shcilestamp.com/) where one can get an e-stamp paper which is considered to be more secure.

Who pays the stamp duty?

The property buyer pays the stamp duty and registration charges in most cases. However, in exchange cases, the registration and stamp duty amount is levied by both parties involved in the transaction.

When is the stamp duty paid?

In most Indian states, the stamp duty is payable during the registration or the execution of the legal documents. In some states in India, the stamp duty is paid before the documentation, while in others, the stamp duty is paid within a specified period after registration.

What are stamp duty charges?

Although the central government establishes the stamp duty and registration rates, the charges may vary from state to state in India based on multiple factors, such as the market value of the property, the circle rate, property type, intended use of the property, and gender. Again, these factors may vary based on the state. For example, in some states, the stamp duty and registration fees are lower for women compared to male buyers. A delay in the payment may result in 2% every month, going up to 200% of the remaining amount of the stamp duty.

To get an estimate, these days, buyers can calculate the stamp duty and registration charges with calculators available online. Many websites that offer information regarding banking products and services have stamp duty registration charges calculators where you can calculate the estimated stamp duty percentage on the entire amount of the property. However, calculating stamp duty is fairly simple, but it is still advisable to get professional help while doing so just to avoid miscalculations.

Claim Tax Deductions on Stamp Duty

Indeed, you read right. You can claim a tax deduction on registration and stamp duty under section 80C of the Income Tax Act 1961, up to INR 1.5 lakh. And if there are more than one owner, each one of them can claim the deduction on stamp duty fees.

To Conclude

While buying a house, there are several factors to be considered. First-time homebuyers who are buying a house or any kind of property must have a lot of doubts and concerns, and it is essential to seek either professional guidance or the help of someone who has bought the property earlier. This will eradicate the sense of insecurity and still confidence during property-related transactions.


Frequently asked questions about Stamp duty charges

1. What is the stamp duty value of a property?

Ans. The stamp duty value differs from state to state based on multiple factors, such as the market value of the property, gender of the homebuyer, circle rate, and locality.

2. Is stamp duty tax deductible?

Ans. Yes. One can claim a tax deduction on the stamp duty and registration fees under section 80C of the Income Tax Act 1961, up to INR 1.5 lakhs.

3. Is stamp duty liability for the buyer or seller?

Ans. Stamp duty is to be paid by the buyer. However, in the case of an exchange, the stamp duty is to be borne by both buyer and seller.

4. Is there a stamp duty and registration charges calculator?

Ans. Many online portals have stamp duty and registration charges calculators where the property buyer can calculate the stamp duty applicable based on state and property value.

5. Can I avoid stamp duty charges?

Ans. No. Stamp Duty is a mandatory tax levied by the government of India on the legal recognition of certain documents involved in the transaction during the registration of the purchased property.

6. How to claim stamp duty exemption on your property?

Ans. There are certain parameters that qualify an individual for tax exception on stamp duty. Anyone can claim it after the possession of the property.

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