An overview of stamp duty and registration in Mumbai

Home buying insights | Jan 27, 2021 | 10 min read

Buying a new property is a step-by-step process and involves many expenses that are not apparent upfront. Stamp duty and registration charges are one such expenditure. Buyers must factor in all the allied costs, before moving ahead with a property purchase plan. Hence, they must know how much money is to be paid during property registration.

Stamp duty is a tax levied by respective state governments on the purchase of any immovable asset within India under section 3 of the Indian Stamp Act, 1899. Just physical possession of a property is not considered legal ownership. The property must be registered in your name to be considered legally yours.

Stamp duty on property purchase in Mumbai

Owing to the pandemic, the Maharashtra government, on August 26, 2020, lowered the stamp duty on property purchases across the state, albeit for a specified period. This was targeted to provide an impetus to the housing sector.

The state had lowered the stamp duty rates by 3 % up to 31st December 2020 and by 2% up to 31st March 2021. The stamp duty rates on property purchases had decreased to 2% from 5% till December 31 2020, currently stands at 3% from January 1, 2021 to March 31, 2021. Thus, these rates will be effective only for a seven-month period, after which the standard 5% stamp duty will be applicable.

In March 2020, the Maharashtra government had reduced the stamp duty by 1% in Mumbai and Pune, making this the second instance of reduction in stamp duty.

Stamp duty rate till December 31, 2020Stamp duty rate from January 1, 2021 to March 31, 2021Stamp duty after March 31, 2021
2%3%5%
Stamp duty in Mumbai

Property registration charges in Mumbai

Registration charges on residential properties is INR 30,000 of the agreement value on properties over INR 30 Lakh. In case of properties priced below INR 30 Lakhs, they have to pay 1% of the property cost as the registration charge. Thus, the registration amount is capped at INR 30,000 for residential properties in Mumbai.

How is the stamp duty rate calculated in Mumbai?

Stamp duty that is payable is based on the agreement value as specified in the sale agreement. The property cannot be bought or sold 20% below the prescribed ready reckoner (RR) rates. The government had doubled the differential and raised it to 20% for new homes valued at up to ₹2 crores. This measure is in place till 30th June 2021. This means, the property value must be calculated based on the current RR rates and the stamp duty must be calculated accordingly. In case, the house is being registered at a value higher than the RR rate, the buyer will have to pay the stamp duty on the higher amount. If the property is being registered at a value less than the RR rates, the stamp duty will be calculated according to the RR rates.

How is stamp duty calculated?

With the differential now doubled, developers can now sell their properties at 20% lower than the area’s RR rate without incurring additional tax burden. Let’s take the case of a property with a carpet area of 1000 sq ft where the circle rate is INR 7,000 per sq ft. The RR-based value of the house would be 1000 x 7000 = INR 70 lakhs.

In case the property is registered at the value of Rs 70 lakhs, the buyer will pay 3% of this amount as stamp duty, i.e., INR 2,10,000.

Now, the property may also be registered at INR 65 Lakhs which is an amount lower than the RR based value. In such a case, the buyer will have to pay 3% of Rs 70 lakhs towards stamp duty.  This is as the property cannot be registered below the RR rate. Now, suppose the property is being registered at Rs 75 lakhs, the buyer will have to pay 3% of INR 75 lakhs (INR 2.25 Lakhs) towards stamp duty.

How to pay stamp duty to the government in Mumbai?

Due to the benefits and convenience of digitalization, we’ll look at how home buyers can pay stamp duty and registration charges online through e-stamping. The payment can be done online through the Maharashtra stamp and registration departments, Government Receipt Accounting System (GRAS).

Homebuyers would need to log on to https://gras.mahakosh.gov.in/echallan/# and provide all the property as well as personal details. Post that they can make the payment online.

Here is a step-by-step process to pay stamp duty charges:

Step 1: Select ‘Inspector General of Registration.’ In case you are not a registered user, select the ‘Pay Without Registration’ option. A registered user can proceed by entering their login details.

Step 2: Suppose you choose the ‘Pay Without Registration’ option, a new page would appear where you have to click on ‘Citizen’ and select the type of transaction.

Step 3: Select ‘Make Payment to Register your Document’. You have the option to pay stamp duty and registration charges together or separately.

Step 4: On choosing any of the displayed options, key in the required input fields to proceed. The details required mainly include district, the sub-registrar’s office, property details, transaction details, etc.

Step 5: After selecting the mode of payment and adding your payment details, proceed with the payment. Post this, an online receipt will be generated. This is a document indicating that you have successfully paid the stamp duty and must be presented at the sub-registrar’s office at the time of the property registration.

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