Stamp Duty in India

Mon, 08/15/2022 - 03:15

Author: JLL


Are you a first-time homebuyer and planning to apply for a home loan? Did you consider the additional cost that your property would incur? If not, read on! Stamp duty is one of the additional costs you are liable to pay on buying or transferring any property. With stamp duty, you also incur registration and other charges that may imbalance your budget and ultimately lead to chaos, burning a hole in your pocket by paying a substantial amount unprepared. Therefore, it is necessary to understand the crux of paying the stamp duty. So, let us dive deep and discover the legal facts, regulations, and significance of paying Stamp duty!

What exactly is Stamp Duty?

Stamp duty is a mandatory indirect tax under the provision of the Bombay Stamp Act, 1958, and the Indian Stamp Act, 1899. It is levied on all real estate transactions before any legal documents are made effective. The burden of paying stamp duty lies with both the seller and the buyer.

What factors are considered during stamp duty registration?

The factors considered during stamp duty registration are age of the property, value of the property, city or location of the property, gender and age of the property owner, and usage of the property.

Is stamp duty applicable on all real estate property transfer documents?

Yes, barring the transfer by will, the stamp duty is mandatory and payable for all transfer instruments, including mortgage deed, conveyance deed, exchange deed, gift deed, lease deed, tenancy agreement, power of attorney, and agreement to sell.

How much do stamp duties cost in India?

In India, the stamp duty varies from state-to-state depending upon the state where you are planning to buy a property. However, the stamp duty rates also differ within the state based on the location and considering the boundaries or jurisdiction of gram panchayat, municipal council, and municipal corporation.

What types of documentation are needed to pay stamp duty?

The documents required for stamp duty include the PAN Card, Aadhaar Card, or any other available government-issued identity proof. However, the signatories must produce the power of attorney documents if they are in charge on behalf of another person.

How is the calculation for stamp duty done?

The calculation for the stamp duty is based on property valuation, calculated using the guidance value method. The guidance value method or circle rate is the minimum value at which the property registration takes place.

What is the procedure for paying stamp duty?

Stamp duty can be paid in three ways, namely, non-judicial stamp papers, e-stamping, and franking. Singing non-judicial stamp paper is a conventional way where an individual purchases the stamp paper from an approved vendor, writes out all the conditions of the agreement and gets it signed by both parties. However, the E-stamping method provides the flexibility to pay your stamp duty online while the franking method involves a bank or an authorised authority that collects the stamp duty at the center with the hard copy of the mandatory documents.

What is the proper way to sign a document stamped with an adhesive?

According to Section 13 of the Indian Stamp Act of 1899, an individual signing the document must cancel the stamp (adhesive) by signing across it. A document is regarded as unstamped if the procedure mentioned in the act does not comply.

Why paying stamp duty is necessary?

A paid stamp duty can serve as a legal document in a court of law. In the event of false claims or disputes made by any individual against the property, stamp duty can be produced as evidential proof of owning a property.

What is the consequence of not paying the stamp duty?

If you do not pay the stamp duty, a penalty of 2% is payable per month on the deficit amount.

What are the tax advantages of paying stamp duty?

On purchase or construction of a property in the fiscal year, you can claim the income tax deduction on stamp duty, registration, or any other transfer cost associated with the property under section 80C of the Indian Income Tax Act, 1961, restricting the claim up to 1.5 lacs.

With this information, you can plan, apply for a home loan, and start your journey of buying a secure dream home! For more information, reach out to our advisors, experts in the domain, who can help you find the best deal! Get started now!