How Are Property Stamp Duty And Registration Charges Calculated?

Are you planning to purchase a property?

Remember that the price quoted by the seller is not the final amount that you have to pay. Apart from the property price, you also have to pay stamp duty and registration charges to purchase a property.

The sanctioned home loan amount does not include these charges in most cases. So, you must factor in stamp duty and registration charges and save up accordingly.

Go through the following sections to know about these charges.

About Stamp Duty and Franking Charges

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 system 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 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. 

Also Read: How To Use Home Loan Prepayment Calculator?

How Are Stamp Duty Charges Calculated in India?

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 Stamp Duty Ready Reckoner. Upon considering this value, authorities compare the stamp duty with the circle rate. After that, they decide the stamp duty on the value that is on the higher side.

How to Pay Stamp Duty?

Here are the different ways through which you can pay stamp duty:

Franking

In this method, agreement details are printed on paper and submitted to the franking agent along with the stamp duty charges. Here, you must note that only certified agents carry out franking transactions and may ask for additional costs regarding the same.

E-stamping

This is the most convenient way to pay your 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. 

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 stamp duty.

Stamp Duty Charges Across Various Indian Cities

Here is a tabular representation of stamp duty charges in different Indian cities:

Name of City	Charges
Delhi	4% to 6%
Bangalore	2% to 3%
Chennai	7%
Mumbai	4% to 5%
Kolkata	3% to 5%

Rates are subjected to change

Factors to 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, and more

In addition, the owner’s age also affects the amount of stamp duty.

Also Read: Fixed Rate Vs Floating Rate In Home Loan

Documents Required to Pay 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 builder and landowner
• All previously registered agreements (only for re-sale 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

Document Registration After Paying Stamp Duty

After paying the 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, it becomes legal, and you become the property’s owner. For this, you will have to pay a certain registration fee, over and above the stamp duty. This fee varies from state to state but is usually around 1% of the property’s total cost or market value. 

What Are The Stamp Duty Charges Applicable for Women Buyers?

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 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.

What Happens If You Pay Incomplete 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 stamp duty charges and registration fees.

It is advisable not to lower 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 under Stamp Duty

To ease the burden upon potential homebuyers, the government has included stamp duty and registration charges under the Income Tax Act. This means you can avail of tax benefits on 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.

Final Word

If you are of the notion that stamp duty and registration charges are included in a home loan, you must know that they are not. Hence, to make an informed and streamlined home purchase, you should conduct thorough research and save up accordingly.

Stamp Duty & Registration Charges in Different States & Cities

Stamp Duty in Pune	Stamp Duty in Mumbai
Stamp Duty in Karnataka	Stamp Duty in Delhi
Stamp Duty in Hyderabad

Frequently Asked Questions

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