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11 facts about stamp duty levied on property purchase written by Sunita Mishra, published in Housing.com. May 15, 2020

We answer some key questions about stamp duty payment on property transactions in India

 

Among the many additional costs that a buyer has to pay on property purchase in India, is stamp duty. This is the amount that a property buyer has to pay, in order to register the documents in the government records that act as a proof of their ownership over the asset. As stamp duty payment plays a crucial role in concluding a property transaction, buyers must know important facts about this levy.

 

Is stamp duty compulsory?

 

Paying stamp duty on property transactions is mandatory under Section 3 of the Indian Stamp Duty Act, 1899. Apart from being legally obliged to pay stamp duty on property purchase, doing so is also important for a buyer to establish legal ownership over the asset.

 

Who collects stamp duty?

 

Since land is a state subject, the rules and regulations governing stamp duty charges are formulated and revised by the state governments. Thus, the money that buyers pay as stamp duty,  goes into the state exchequer.

 

Who should pay stamp duty?

 

The buyer is responsible for paying the stamp duty on property purchases.

 

How is stamp duty rate fixed?

 

States are responsible for levying stamp duty on property purchases. They also periodically revise these charges, to make property affordable for buyers or increase revenue.

 

  • Payment of stamp duty is mandatory under Section 3 of the Indian Stamp Duty Act.

 

  • Stamp duty charges vary between 3% and 10% of the property value.

 

  • The buyer is responsible for paying the stamp duty on property purchases value

 

  • You can claim deductions under Section 80C for stamp duty and registration charges paid on property purchase

 

11 facts about stamp duty levied on property purchase

 

What is the stamp duty on real estate transactions?

 

In India, stamp duty charges vary between 3% and 10% of the property value across states. This means, for a property worth Rs 50 lakhs in Delhi, the applicable stamp duty is 6% and so, the buyer has to pay Rs 3 lakhs. The charges may also vary, depending on your gender.

 

What is the stamp duty rate for women?

 

If the property is registered in a woman&rsquos name, exemptions are offered by several states, on stamp duty charges. In Delhi, women home buyers have to pay only 4% of the transaction value as stamp duty, while the charges are 6% for men.

 

Are there any discounts on stamp duty?

 

Developers sometimes offer home buyers with complete waiver of stamp duty payments, as part of festive offers. This does not mean that the payment does not have to be made at all. It only means that the builder is willing to make this payment on his own.

 

Do I have to pay any penalty on stamp duty?

 

As the payment of stamp duty is mandatory under Section 3 of the Indian Stamp Duty Act, failure to register your property attracts a penalty.  Typically, you have to pay the outstanding amount, along with a penalty of 2% interest accumulating per month. The penalty could go to as high as 200% of the original liability.

 

Can I get a loan to pay stamp duty?

 

Since stamp duty considerably increases up the cost of property purchases, the RBI has urged banks to include stamp duty value while calculating the borrowers&rsquo loan to value ratio (LTV). LTV is the ratio of the loan amount to the value of the property.

 

Can I pay stamp duty online?

 

In order to simplify the stamp duty payment procedure, several states currently offer online stamp duty payment services including Delhi, Maharashtra, Karnataka, Jharkhand, Telangana, etc. Buyers in these and many more states, can now pay stamp duty online to register their property.

 

Do I get tax deductions on stamp duty payment?

 

Deductions can be claimed under Section 80C of the Income Tax Act on stamp duty and registration charges paid on the purchase of a home, under the overall limit of Rs 1.50 lakhs per annum. This claim can, however, be made only in the year when the property is purchased.

 

 

FAQs

 

What is stamp duty?

Stamp duty is the amount that a property buyer has to pay, to register the documents in the government records that act as a proof of their ownership over the asset.

 

What is the rate of stamp duty on property buying in India?

Stamp duty rates differ across Indian states and are currently between 3% and 10% of the property value.