Buying a new property is an intricate, step-by-step process and involves many expenses that are not apparent upfront. Stamp duty is one such expenditure. If you have ever bought a property, commercial or residential, you will have paid stamp duty on the transaction. If not, you’ll at least have heard of it.
It is a part of the expenses that you will incur when you buy your new home. Any property-related financial transaction done in India includes this expense. So, what is it and how can it affect your home buying decision? Let us take a closer look and understand why you need to account for it whenever you buy a new property.
Stamp duty is a tax levied by respective state governments on all property transactions within India under section 3 of the Indian Stamp Act, 1899. Just physical possession of a property is not considered as legal ownership. The property must be registered in your name to be considered legally yours.
It is the amount you pay while registering the property in your name. In India it varies between 2% – 7% of the property agreement depending on type of property and the state or union territory in which it is located. As a homebuyer you can claim tax benefit on stamp duty and registration charges up to ₹ 1.5 lakhs under Section 80C of the Income Tax Act, 1961.
Before digitization, it had to be paid in the sub-registrar’s office, following a long-winded, step-by-step process. Though this option is still available, it can now also be paid online. It is easy, convenient, and goes a long way in taking on counterfeiting. Currently, Stock Holding Corporation of India Limited (SHCIL) takes care of all online registrations all over India except Mumbai. In Mumbai, online stamp duty is to be paid through the Government Receipt Accounting System (GRAS) of the Maharashtra Government.
There are three ways in which you can pay the stamp duty on your new property purchase;
Due to the benefits and convenience of digitalization, we’ll look at how you can pay your stamp duty through e-stamping at SHCIL.
Stamp duty payment through GRAS for Mumbai is slightly different.
This is a question many people have. You will have to pay it before the execution of your property document, or on the next working day of execution at the most. By execution we mean signing the transfer of property document by the parties involved in the transaction.
Here’s a look at the current rate of stamp duty that is applicable in the major cities across the country.
|City||Stamp Duty (% of Property Value)|
|Bengaluru, Mysore, Mangalore||5% on properties above ₹ 35 lakhs |
3% on properties between ₹ 21 to 35 lakhs
2% on properties below ₹ 21 lakhs
|Gurgaon||7% for male owners, within municipal limits |
5% for female owners, within municipal limits
6% for joint ownership, within municipal limits
5% for male owners, outside municipal limits
3% for female owners, outside municipal limits
4% for joint ownership, outside municipal limits
|Kolkata||7% for properties over ₹ 25 lakhs, within municipal area |
6% for properties below ₹ 25 lakhs, within municipal area
6% for properties over ₹ 25 lakhs, outside municipal area
5% for properties below ₹ 25 lakhs, outside municipal area
|Navi Mumbai, Pune, Thane||2%|
In addition to caring from city to city, stamp duty over a property depends on the following factors;
It is a pre-set percentage of the property value that is different in each state. It is charged on the current ready reckoner rates or current market value or consideration value of a property, whichever is higher. Additionally, all the factors listed above also play a role in determining the stamp duty on a particular property.
It is worth noting that stamp duty and registration charges are not included in the home loan, but are to be borne by you. Make sure that you factor that in your home buying decision.