What Is Home Loan Stamp Duty: Charges, Calculator and Tax Benefits
If you are planning to purchase a property, the price quoted by the seller is not the total amount you have to pay. Stamp duty and registration charges are also added. The sanctioned home loan amount does not include these charges in most cases. So, you must factor in home loan stamp duty and registration charges to plan your finances accordingly.
This article provides a detailed explanation of home loan stamp duty and registration charges.
What is Home Loan Stamp Duty?
Home loan stamp duty is a tax that homebuyers are liable to pay on any monetary transactions regarding their property. Introduced through the Indian Stamp Act in 1899, this charge legalises certain documents, including deed of conveyance, sales deed, etc.
In India, stamping is commonly done through franking, paper-based systems and e-stamping methods.
Franking is the process through which you confirm that you have made the payment for stamp duty. This process proves that your property documents are legal.
The primary difference between housing loan stamp duty and franking is that the former is a tax, whereas the latter is the process to indicate those taxes and charges.
Upon approaching the franking agent, you will see that the agency will affix your paperwork with a stamp, indicating that your stamp duty is paid off.
How are Home Loan Stamp Duty Charges Calculated in India?
Home loan stamp duty or registered mortgage stamp duty charges are calculated by evaluating the valuation of a property. These charges depend upon the market value of a property and various factors such as its type (commercial/residential), location, age, number of floors etc.
The concerned State Government publishes the valuation of properties on the registered mortgage Stamp Duty Ready Reckoner. Upon considering this value, authorities compare the housing loan stamp duty with the circle rate. After that, they decide on the Home loan stamp duty on the value that is on the higher side.
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How to Use a Stamp Duty Calculator?
To use a stamp calculator, you have to follow the given procedure:
- Step 1: Go to a stamp duty calculator page available on the internet.
- Step 2: Provide details such as the state and value of the property.
- Step 3: You will be able to view the stamp duty for your property now.
Stamp Duty Charges Across Various Indian Cities
Here is a tabular representation of stamp duty charges for home loan agreement in different Indian cities:
| City | Charges |
| Delhi | 4% to 6% |
| Bangalore | 2% to 3% |
| Chennai | 7% |
| Mumbai | 4% to 5% |
| Kolkata | 3% to 5% |
Factors that Determine Stamp Duty Charges
As mentioned earlier, this charge is not the same in all states. However, there are a few factors that influence stamp duty charges. They are:
- Type of land (non-agricultural or agricultural)
- Type of property
- Property age
- Owner’s gender
- Amenities present on the premises
- Freehold or leasehold property
In addition, the owner’s age also affects the amount of home loan stamp duty.
How to Pay Home Loan Stamp Duty?
Here are the different ways through which you can pay stamp duty:
1. Franking
In this method, agreement details are printed on paper and submitted to the franking agent along with the registered mortgage stamp duty charges. Here, you must note that only certified agents carry out franking transactions and may ask for additional costs regarding the same.
2. E-stamping
This is the most convenient way to pay your home loan stamp duty charges. You have to visit the official website of SHCIL and log in using your credentials. After that, you can complete the payment via several online payment methods.
3. Non-judicial stamp papers
The document details are printed on a non-judicial stamp paper in this method. You have to purchase this paper from licensed vendors. Upon verifying their correctness, the authorities will sign the documents. Here, the stamp paper’s value will equal the applicable registered mortgage stamp duty.
Documents Required to Pay Home Loan Stamp Duty Charges
- Sales deed
- BBMP extract certificate
- Khata certificate
- Last 3 months’ tax receipts
- Power of attorney/s, if there is any
- Registered development agreement (only for Joint Development Property)
- Joint development agreement between the builder and landowner
- All previously registered agreements (only for resale properties)
- 7/12 extract or RTC
- Latest bank account statements (for any outstanding loan amount)
- Conversion Order
- Sale agreement
- Certificate of encumbrance
- NOC from Apartment Association
- Electricity bill
- Approved building plan
- Land owners’ title documents
- Possession/occupancy certificate of the landowner
- Society registration certificate’s photocopy
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Document Registration After Paying Stamp Duty
After paying the home loan stamp duty, you must register your property documents with a sub-registrar under the Indian Registration Act. The purpose behind this registration is to keep proof of the execution of these documents.
Only after you register the documents do you become the property’s legal owner. For this, you will have to pay a certain registration fee, over and above the registered mortgage stamp duty. This fee varies from state to state but is usually around 1% of the property’s total cost or market value.
Stamp Duty Charges for Home Loan Agreement for Women
In some states, women buyers have to pay reduced stamp duty. For instance, according to the official website of the Delhi government, women buyers are liable to obtain a concession on registered mortgage stamp duty charges. Stamp duty for men in Delhi is 6%, whereas the same for women is 4%.
You must check if your state offers any concession for women regarding stamp duty charges beforehand.
Implications of Part-Payment of Stamp Duty Charges
The law requires homebuyers to pay the correct stamp duty when seeking property registration. However, there are many instances where individuals quote an undervalued property to escape hefty registered mortgage stamp duty charges and registration fees.
It is advisable not to lower home loan stamp duty. If you are caught in the process, you will be fined with huge penalties and can be imprisoned.
If you are seeking to purchase an expensive property and are tied within a budget, you can finance your purchase through a high-value home loan from the Navi app. Meanwhile, you can use your savings to pay the stamp duty charges to streamline the process.
Tax Benefits of Paying Home Loan Stamp Duty
To ease the burden upon potential homebuyers, the government has included registered mortgage stamp duty and registration charges under the Income Tax Act. This means you can avail of tax benefits on home loan stamp duty under section 80C of this act.
As this section states, the maximum tax deduction for these expenses is Rs. 150,000, subject to certain conditions. The taxpayer needs to have a fully constructed property and have legal possession of it. Moreover, this deduction is available only for a new residential property and not a commercial one.
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Stamp Duty Levied on Resale Flats in India
Irrespective of whether the property is old or new or under construction, stamp duty and registration charges are levied as per the state rules. As per Section 3 of the Indian Stamp Act, 1899 it is necessary to pay stamp duty for the parties involved in a sale deed.
Final Word
To become the legal owner of a property you buy, you must pay home loan stamp duty and registration charges. While applying for a home loan, keep these charges and fees in mind and apply for an appropriate amount. To make an informed and streamlined home purchase, you should conduct thorough research and save up accordingly.
FAQs
Ans: You must meet the eligibility criteria to avail of tax benefits on stamp duty and registration charges. The parameters for claiming tax benefits regarding these charges are that you need to be an ‘Individual’ or belong to a ‘Hindu Undivided Family.’
Ans: No, as of now, GST and stamp duty are two separate charges that you are liable to pay in order to secure a property purchase. Meaning, both these charges have no impact on one another.
Ans: Stamp duty is chargeable on instruments rather than transactions. An instrument is any document through which a liability or right is created, transferred, limited, extinguished or recorded. Proper stamp duty payments on instruments bear legality to them and act as evidence for the property buyer.
Ans: Yes, stamp papers are valid for 6 months. As per the act’s provisions, stamps that remain unused for 6 months will be pronounced invalid. In that case, you will receive a refund after the deduction of certain charges.
Ans: The land that you have purchased is a state subject. In addition, all the rules and regulations regarding stamp duty chargers are formulated by the state government. Therefore, the state exchequer receives the stamp duty charges.
Ans: No, stamp duty and registration charges are not included in a home loan. These are extra and have to be paid by the owner out of his pocket.
Ans: To register a property post payment of registration charges and stamp duty, you have to make an appointment with the sub-registrar for registration of the sale deed. On the given date you have to go to the sub-registrar’s office along with two witnesses.
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Disclaimer: This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information, and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.
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