Stamp Duty

Don’t Register Your Property Without Knowing About Stamp Duty

So, you finally bought that dream home you had been eyeing for long. Congratulations! Now, it’s time to make your investment official by registering your property. But know before your sign! Arm yourself with all the knowledge about stamp duties before you do!

What is stamp duty?

Stamp duty is a charge payable on the sale agreement, on or before the date of registration of the agreement. It is one of the most crucial documents as it provides a legal status to the property transaction. Being a state subject, it is fixed by the state government and varies anywhere between 4 to 8%.


Did you know?

Stamp duty in India was first introduced by the British in 1899. Back then, the stamp duty had to be deposited in the government treasury for all property transactions, which were carried out through documents or instruments under the provisions subscribed in the Indian Stamp Act of 1899 and Bombay Stamp Act of 1958.

Stamp duty depends on factors such as:

  • Location of the property
  • Property type (commercial or residential)
  • Property status
  • Gender

In some states, women homebuyers get a discount on the stamp duty rate. This is, precisely, why many homebuyers get their property registered in the name of their wives or any other female member of the family.

How is stamp duty calculated?

Stamp duty varies from state to state. Thus, the rates also differ based on the type of structure and the kind of locality. For instance, in Bangalore, the base rate for stamp duty is 5%. There is a 10% cess and 2% surcharge. For rural areas, the surcharge is 3%. So, for urban areas, the rate becomes 5.6%, and for rural areas, it is 5.65%.

It is important to note that stamp duty is levied only on the total saleable value of the property, which is calculated by first multiplying the size of the property with its guidance value or the market value given by the builder. Then, car parking charges and floor rise, or preferential location charges are added to give the total saleable value of the property.

City – Stamp Duty Rate

  • Bangalore  5%
  • Chennai  7%
  • Delhi  4-6%
  • Mumbai  3-5%
  • Pune  3-5%
  • Hyderabad  4%
  • Kolkata  5-7%
  • Ahmedabad  4.90%

Table 1: Stamp duty rates in cities with high real estate activity

Remember, that guidance value is set by the state government, and is the minimum amount for which a property can be registered.

How to pay stamp duty?

Stamp duty is a one-time charge paid under Section 3 of the Indian Stamp Duty Act, 1899. It can be paid through –

  • Purchase of impressed stamps
  • Purchase of adhesive stamps
  • A document was written on plain paper with a DD or pay order payment. The document should be certified within two months of execution by the sub-registrar. And the payment must be issued by a nationalised bank
  • To simplify stamp duty payment, states like Maharashtra have initiated an online process for the same

Are there any penalties?

To save money on property transaction, people usually tend to decrease the property value in the sale agreement, thus paying less tax than the actual amount. While it is a common way of evading tax, many are not aware of the heavy penalties.
The penalty for stamp duty evasion also varies from state to state and can range anywhere between 8-20% of the actual stamp duty. It can also lead to imprisonment.

Can stamp duty waiver boost affordable housing?

In the last two years, affordable housing has garnered exclusive focus from the ruling government. Be it the accordance of infrastructure status or exempting affordable housing from service tax, these measures have contributed to the Housing for All Mission in some way or the other.

Addressing the need to rationalise stamp duty, the Union Minister for Urban Development and Housing, M Venkaiah Naidu, asked states for a waiver on the stamp duty for affordable housing.

Unfortunately, stamp duty and registration charges are not subsumed into GST.

In one of the recent Confederation of Real Estate Developers, Associations of India’s Conclaves, the minister said, “the Centre would ensure that there was no net tax escalation in the housing sector, particularly the affordable housing segment, following the implementation of the goods and services tax (GST).”

In fact, talks to bring electricity, real estate, stamp duty and petroleum products under the ambit of GST are also doing the rounds.

All said and done, it will be interesting to see if the stamp duty is actually subsumed into the GST in the times to come.



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