What is stamp duty?
Stamp duty is a mandatory charge that a buyer needs to pay to the state government when they are purchasing a new property. This registration charge is compulsory because your ownership of the property can only be verified once the stamp duty charges are paid. If the stamp duty charges aren’t paid, you will be identified as the legal owner of the property. The stamp duty charges range between 4% and 9% of the property’s market value.
How is stamp duty calculated?
The stamp duty is based on the market value, circle rate, the ready reckoner rate of the property, or the consideration value of the property, whichever is higher. The consideration value is the agreed-upon rate between the buyer and seller.
To evaluate the value of your property, you need to first establish the circle rate or ready reckoner rate, which is decided by the state government. Proceed to multiply the built-up area of your property with the circle rate. This will provide you with the market value of your property. You are required to pay stamp duty on the market value rather than the actual value of the property.
Here are some of the factors that determine the stamp duty charges you need to pay:
- Age of the property owner.
- Gender of the property owner.
- Property type if it is residential or commercial.
- Location of the property.
- Number of floors in your property.
- Market value of the property.
Are stamp duty and registration charges included in your home loan?
The stamp duty and registration charges are expenses that the buyer will need to bear. Your home loan does not include these costs.
Here are the stamp duty charges in multiple cities:
| States | Stamp Duty Charges (Common) | Stamp Duty Charges (Male) | Stamp Duty Charges (Female) |
| Delhi | – | 6% | 4% |
| Mumbai | – | 6% | 5% |
| Pune | – | 7% | 6% |
| Bangalore | 5% (Above Rs. 45 Lakhs)
3% (Above Rs. 21-45 Lakhs) 2% (Less Than Rs. 20 Lakhs) |
– | – |
| Hyderabad | 5% | – | – |
| Chennai | 7% | – | – |
| Kolkata | 5% (Above Rs. 1 Crore)
4% (Up to Rs. 1 Crore) |
– | – |
| Punjab | – | 7% | 5% |
What happens if you don’t pay your stamp duty charges?
Under the Indian Stamps Act of 1908, it is compulsory for the buyer to pay the stamp duty charges and failing to do so can incur heavy penalties or even criminal charges. The penalties range between 8% to 20% of the actual stamp duty charges and even imprisonment.
How can you pay your stamp duty charges?
- Physical Stamp Papers:
This is one of the oldest methods of paying your stamp duty charges. The buyer can acquire the papers from the seller upon which the property details and the sale agreement were formed. Physical stamp papers are used when the stamp duty charges are not very high, as in the case of a lease deed or a mortgage deed.
- E-Stamping:
E-Stamping has become the most common and convenient method of paying your stamp duty charges. You can either pay the stamp duty charges online or deposit the charges at the bank to receive the challan. With the challan, you will obtain an acknowledgement number that you can enter on the SHCIL portal to generate the application so you can submit it at the stamp duty collection centre and get the e-stamp papers.
- Franking:
Franking is another method of paying your stamp duty charges, but it isn’t very common as it will incur franking charges as well.
What is a stamp duty calculator?
A stamp duty calculator is an important online tool that you must consider using to establish your stamp duty charges, and it is important for you to know the accurate figure that needs to be paid because it may create a financial misunderstanding and may cause a hindrance to your home loan planning.
Here is how you can use a stamp duty calculator:
Step 1: Visit an online stamp duty calculator.
Step 2: Enter your state of registration.
Step 3: Enter your property value.
Step 4: Upon entering the details required the calculator will display your stamp duty charges and the rate within your state.
Here are the benefits of a stamp duty calculator:
- A stamp duty calculator operates on the basis of an algorithm hence it provides you will accurate results.
- The chances of making manual errors are removed.
- An online calculator will help you save time.
What are some important points you should know about stamp duty?
- Under Section 80(C) of the Income Tax Act, you can claim a tax deduction on the stamp duty charges up to a maximum limit of Rs. 1,50,000/-
- GST is not applicable on the stamp duty charges.
- Stamp duty charges are mandatory and non-refundable.
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