Purchasing a property is a major financial decision that requires thoughtful budget planning. Of the many expenses involved in the purchase, stamp duty is a significant expense that impacts the total cost of property ownership. It is mandatory to pay the stamp duty to the state government. Further, there are registration charges also associated when a buyer registers the property in the state where the property was purchased. Hence, property buyers should check the prevailing stamp duty rates and registration fees applicable in their state and plan their expenses in advance to ensure a hassle-free property buying experience. In this guide, we explain all about the stamp duty and registration process.
What is stamp duty?
Stamp duty is a tax levied by the state government on documents involving the purchase or transfer of a property, payable under Section 3 of the Indian Stamp Act, 1899. The stamp duty varies depending on factors such as the state or location, property age, etc. A homebuyer must pay stamp duty varying from 4% to 7% of the property value, depending on the state where the property is located.
In India, stamp duty was first implemented as a form of tax in India in the late nineteenth century, levied on all properties, including leasehold or freehold properties, non-agricultural and agricultural land, commercial and residential properties, etc. Stamp duty must be paid on the sale of all real estate except those sold by Will.
What is registration fee?
The registration of property documents before the Sub-Registrar Office (SRO) to officially record the transfer of ownership of a property from one party to another with the government. During the registration process, the buyer must pay a specified amount as the registration charges levied by the state government. The property registration fees vary from state to state.
Why is paying stamp duty and registration fee important?
- According to the law, the payment of stamp duty and registration charges is mandatory because it gives legal validity to the property transaction. The stamp mark on the property documents denotes the presumed permission from the relevant authority.
- Further, the property document that is properly stamped can serve as evidence in a court of law. Hence, they prove to be useful in case of disputes related to the ownership of the purchased property.
- The state government levies the stamp duty on property transactions as it forms a major source of revenue for the government.
Tax benefits on stamp duty payment
According to Section 80C of the Income Tax Act 1961, a property buyer is eligible to claim a tax deduction on registration and stamp duty up to Rs 1.5 lakh. If there are co-owners, each property owner can claim the deduction on stamp duty charges.
Who should pay stamp duty?
In most cases, the property buyer is required to pay the stamp duty and registration charges when purchasing a property. However, in the case of exchange, the stamp duty and registration has to be paid by both parties (buyer and seller) involved in the transaction.
Factors affecting stamp duty rates in India
The stamp duty rates are determined by the local government and influenced by several factors, as discussed below:
- Property value: The stamp duty amount a property buyer should pay will depend majorly on the property value. Typically, stamp duty is a percentage of the property’s purchase price or market value. The higher the property value, the higher the stamp duty will be.
- State or location: Stamp duty rates vary based on the location – state, province or country. In India, the state government is responsible for fixing the stamp duty rates.
- Property type: Stamp duty rates also vary based on the type of property, such as residential, commercial and agricultural land.
- Transaction type: The stamp duty calculation is also done by considering the type of transaction. For example, whether it is a property purchase, transfer of ownership or other types of transactions for which different stamp duty rates apply.
- Gender: In some states, stamp duty rates vary based on gender or age. For example, women home buyers in some states are allowed rebates on stamp duty to encourage them to purchase properties.
- Age: Stamp duty rebates may be available for senior citizens in some states. Hence, age is a crucial factor when determining the stamp duty rates in India.
- Amenities: The government may levy charges for additional amenities in the property such as lifts, swimming pool, club, gymnasium, library, community hall, sports area, etc.
How to calculate stamp duty rates in India?
Stamp duty on a property is applicable on the property value, the ready reckoner rate or the value of property mentioned in the agreement, whichever is higher. The ready reckoner rate, also known as the circle rate, is the minimum price of a property determined by the state government, below which a property cannot be registered.
Example:
Here is an example of a property transaction between Mr A and Mr B in Delhi. Let us assume the circle rate of a residential property in a locality in Delhi is Rs 70 lakh and the property value decided between the seller and buyer during the transaction Rs 65 lakh. The stamp duty on the sale of the property is 6% for males and registration charges is 1% of the property value.
So, the stamp duty and registration charges to be paid by Mr A is as follows:
Stamp duty = 6% of Rs 70 lakh = Rs 4.2 lakh
Registration charges = 1% of Rs 70 lakh = Rs 70,000
Total cost borne by the buyer = Property cost + stamp duty + registration charges = Rs 65 lakh + Rs 4.2 lakh + Rs 70,000 = Rs 69.9 lakh
When should you pay the stamp duty?
Typically, the stamp duty payment in India must be made during the registration or the execution of the property documents. In some states, the stamp duty payment should be made before the documentation process, whereas in other states, the stamp duty should be paid within a specified period after registration.
Penalty for non-payment of stamp duty and registration charges in India
When undertaking a property transaction, the buyer should pay the stamp duty in full and on time. Failure to do so will result in fines and penalties. The stamp duty should be paid at the time of signing the sale document or within one working day after signing the agreement. Delay in payment of stamp duty will lead to a penalty at 2% per month up to a maximum of 200% of the original amount.
The stamp papers must be registered either in the name of the property seller or the buyer. Failure to do so will result in the disabling of stamp paper. The stamp duty is valid up to six months from the purchase date only in case if it is paid on time.
How to find stamp duty and property registration charges?
The stamp duty and registration charges are determined by the respective state government and are revised periodically. One can approach the relevant government office in their area to get the required information. However, most states allow buyers to calculate the stamp duty and registration charges online through their official website. These websites provide a stamp duty registration charges calculator and an online tool to calculate the estimated stamp duty and the entire amount to be paid for the property.
Stamp duty and property registration charges in different states in India
| State | Stamp duty rate (percentage of property value) | Registration charges (percentage of property value) | Official website for stamp duty |
| Andhra Pradesh | 5% | 0.5% | https://registration.ap.gov.in/igrs |
| Assam | 8.25% | https://www.shcilestamp.com/ | |
| Bihar | 5.7% (Male to Female)
6.3% (Female to Male) 6% (Other cases) |
2% | https://e-receipt.bihar.gov.in/brcs/ |
| Chhattisgarh | 5% | 4% | https://www.shcilestamp.com/ |
| Delhi | 6% (Male)
4% (Female) 5% (Joint ownership) |
1% | https://www.shcilestamp.com/ |
| Goa | 3.5% (Up to Rs 50 lakh)
4% (Rs 50 – Rs 75 lakh) 4.5% (Rs 75 – Rs 1 crore) 5% (Over Rs 1 crore) |
3% | https://ngdrsgoa.gov.in/ |
| Gujarat | 4.9% | 1% (Zero charges for female) | https://revenuedepartment.gujarat.gov.in/ |
| Haryana | 7% (Male)
5% (Female) |
Upto Rs 50,000 | https://jamabandi.nic.in/defaultpages/default |
| Himachal Pradesh | 5% | 4% for female (till Rs 80 lakh)
8% for female (above Rs 80 lakh) 6% for male (till Rs 50 lakh) 8% for male (above Rs 50 lakh) |
https://himachal.nic.in/ |
| Jammu and Kashmir | 5% | https://igr.jk.gov.in/services.html | |
| Jharkhand | 4% | http://regd.jharkhand.gov.in/jars/website/ | |
| Karnataka | 5% (above Rs 45 lakh)
3% (Rs 21-45 lakh) 2% (Less than Rs 20 lakh) |
1% | https://igr.karnataka.gov.in/english |
| Kerala | 8% | 2% | https://registration.kerala.gov.in/en/home/ |
| Madhya Pradesh | 7.5% | 3% | https://www.mpigr.gov.in/ |
| Maharashtra | 6% for male
5% for female |
1% | https://igrmaharashtra.gov.in/Home |
| Manipur | 7% | 3% | https://ngdrsmanipur.nic.in/NGDRS_MN/ |
| Meghalaya | 9.9% | https://www.shcilestamp.com/ | |
| Mizoram | 9% | ||
| Nagaland | 8.25% | ||
| Odisha | 5% (Male)
4% (Female) |
2% | https://www.igrodisha.gov.in/ |
| Punjab | 7% (Male)
5% (Female) |
1% | https://www.shcilestamp.com/ |
| Rajasthan | 5% (Male)
4% (Female) |
1% | https://epanjiyan.rajasthan.gov.in/ |
| Sikkim | 4% + 1% (Person of Sikkimese origin)
9% + 1% (for others) |
||
| Tamil Nadu | 7% | 4% | https://tnreginet.gov.in/portal/?UserLocaleID=en |
| Telangana | 5% | 0.5% | https://registration.telangana.gov.in/ |
| Tripura | 5% | ||
| Uttar Pradesh | 7% (Male)
7% to Rs 10,000 (Female) |
1% | https://igrsup.gov.in/igrsup/defaultAction.action |
| Uttarakhand | 5% (Male)
3.75% (Female) |
2% | https://registration.uk.gov.in/ |
| West Bengal | 6% (Up to Rs 1 crore)
7% (Above Rs 1 crore) |
1% | https://wbregistration.gov.in/ |
State-wise stamp duty
*Stamp duty rates as applicable as on September 2024 and are subject to revision by the respective state government
How to pay stamp duty?
There are various ways for paying stamp duty in India:
Physical stamp paper
One can buy non-judicial stamp paper (that contains impressed stamps) from an authorised vendor. The transaction details must be typed on this paper. One should note that if the stamp duty to be paid is a high value, then you might require many stamp papers.
One can opt for the offline method of stamp duty payment by visiting the sub-registrar’s office in their location. Approach the office and submit the duly filled application form and supporting documents along with the payment of the requisite fee.
Online method
Buyers can visit the official portal of the Department of Stamps and Registration in their respective state and complete the procedure of stamp duty payment.
E-stamping
Stamp duty and property registration fee payment can also be done through the facility offered by the Stock Holding Corporation of India Limited (SHCIL), a central record-keeping agency (CRA) appointed by the central government for granting e-stamp certificates in the country. The payment can be made through modes like NEFT, RTGS, pay order, demand draft, cheque, cash and account-to-account transfer.
The e-stamping facility is more convenient for property buyers than the traditional stamp duty payment method involving stamp paper purchases. Moreover, the authenticity of the e-stamp can be verified online using the UID number, which is another major advantage and ensures transparency.
Franking
The franking process involves placing a stamp on the property document by an authorised franking agent, which will prove that the stamp duty has been paid. Before executing the transaction for which stamp duty must be paid (generally before signing the document), one must approach a franking agent or an authorised bank that will act as a franking agent to deposit the stamp duty. After payment of the stamp duty, a franking machine will be used to frank the document with a special adhesive stamp.
Each state will levy a minimum amount prescribed for franking. For example, the minimum franking charge in Bangalore is 0.1% of the agreement value. This fee will be adjusted against the stamp duty when executing the sale deed. If the stamp duty rate for the sale deed is 8.25%, one will have to pay only 8.15% as the franking charge of 0.1% was already paid.
Documents required for stamp duty payment
- Transfer instruments
- Gift deed
- Sale certificate
- Power of attorney
- License Agreement
- Lease deed
- Exchange deed
- Deed of partition
- Mortgage deed
- Tenancy agreement
- Reconveyance deed
Housing.com News Viewpoint
Stamp duty is a mandatory tax, a non-refundable amount, that every property buyer has to pay when undertaking a property transaction. There are fines applicable for late payment or payment of a lesser amount of stamp duty than what is applicable. This can also result in severe action, such as imprisonment. Thus, it is essential for property buyers to be aware of the latest stamp duty rates and various regulations related to stamp duty payment.
FAQs
Is GST included in stamp duty?
Stamp duty and GST are separate taxes levied on the sale of properties. GST is not applicable on stamp duty payments.
Are stamp duty and registration charges covered by home loan?
Stamp duty and registration charges are not covered in a home loan approved by a lender. These are out-of-pocket expenses borne by the buyer.
| Got any questions or point of view on our article? We would love to hear from you. Write to our Editor-in-Chief Jhumur Ghosh at jhumur.ghosh1@housing.com |
