All About Stamp Duty in India

Stamp duty is the evidence that a property has been bought either in the buyer’s or seller’s name and is valid for 6 months. It is levied on all legal property transactions. Several documents require stamp duty.

What is Stamp Duty?

All about stamp duty
Stamp Duty

Stamp duty is a government indirect tax, which is levied on all legal property transactions. Stamp duty is, therefore, a tax which is evidence, as it were, of any purchase or sale of a property between two or more parties. Stamp papers, which have to be bought either in the name of the seller or buyer are valid for 6 months, provided the stamp duty is paid without any delay.

Stamp Duty Act

Stamp duty is paid as per the provisions of Section 3 of the Indian Stamp Act, 1899. Stamp duty is levied to boost revenue for local governments besides lending legality to a document.

Stamp Duty Payment

It is important to note that stamp duty should be paid in full and without any delay, failing which, a penalty is levied. A stamp duty document is a legal instrument that has evidentiary value (admissible in a court of law as evidence). Stamp duty has to be paid before execution (signature by an individual’s party) of a given document, the next day, or on the day of document execution. Stamp duty is paid by a buyer in most cases. However, both the seller and the buyer have to bear the burden of stamp duty for property exchange cases. As per Section 13 of the Indian Stamp Act, 1899, an individual executing a given instrument has to cancel the stamp (adhesive) by writing his initials or name across it. If a stamp is not canceled in the aforementioned method, the document is considered unstamped. In other words, the stamp should be visible on the face of an instrument and therefore, cannot be applied to another instrument.

Stamp Duty Charges

Stamp duty rates differ in various states across the country as stamp duty in India, is a state subject. However, the central government fixes the stamp duty rates of specific instruments. As mentioned above, a delay in the payment of stamp duty will attract a penalty of 2% every month (up to 200% of the remaining amount).

Stamp Duty on Property Registration

Legal evidence of ownership or transfer of a property is mandatory. In the end, the buyer, in most cases, has to register his or her name in the municipal records. The buyer has to pay stamp duty at the time of registration. The amount of stamp duty may vary from one state to another. Stamp duty also depends on whether a given property is new or old.

Stamp Duty Registration Factors

  • Age of the Property
  • Value of the Property
  • City or location of the Property
  • Gender and age of the Property owner
  • Usage of Property

Documents which Require for Stamp Duty

Some of the documents which require stamp duty are listed below:

  1. Transfer instruments
  2. Deed of partition
  3. Reconveyance of mortgaged property
  4. Mortgage deed
  5. Certificates of sale
  6. Gift deed
  7. Exchange deed
  8. Tenancy agreement
  9. Power of attorneys
  10. License agreement
  11. Lease deeds

Stamp Duty Rates in Indian states

Stamp duty rates in various states is listed in the table below:

State Stamp Duty Rate

Assam

8.25% of consideration

Goa, Daman and Diu

8% of consideration

Haryana

12.5% of consideration

Madhya Pradesh

7.5% of market value

Chhattisgarh

7.5% of market value

Nagaland

7.5% of consideration

Punjab

6% of consideration

Tamil Nadu

8% of market value

Rajasthan

11% of market value of property

Uttar Pradesh

8% of market value or consideration, (whichever is greater)

Tripura

5% of consideration

Delhi

3% stamp duty + 5% surcharge as per Delhi Municipal Corporation Act,1957

Kerala

8.5% (transfer of immovable property within the Municipal Corporation)

Meghalaya

4.6 % (up to Rs.50,000) of consideration

6 % (Rs.50,000 to Rs.90,000) of consideration

8% (Rs.90,000 to Rs.1,50,000) of consideration

9.9% (above Rs.1,50,000) of consideration

Bihar

7% + 2% duty on transfer (within municipal limits)

Jharkhand

7% + 2% duty on transfer

Karnataka

10% of market value (within Bangalore Metropolitan Regional Development Authority); 9% (Corporation or Town Panchayat) of market value

Maharashtra

10% of market value ( Municipal Corporation of Pune, Navi Mumbai)

Top cities Stamp Duty Rates

City Stamp duty rate
Mumbai stamp duty 3%*
Pune stamp duty 3%*
Hyderabad stamp duty 4%
Chennai stamp duty 7%
Bangalore stamp duty 2% to 5%
Delhi stamp duty 4% to 6%
Ahmedabad stamp duty 4.90%
Kolkata stamp duty 5% to 7%

Stamp Duty Calculator

Stamp duty calculators can be used to find the stamp duty applicable on a given property in any state across the country by entering various details such as property value and the name of a state.

For instance: If property of Rs.10 lakh is located in BBMP/corporation area, the stamp duty value will be Rs. 56,000. If the said property is located in BRA/BMRA/village area, the stamp duty value will be Rs.56,500.

Stamp Duty Calculation

You should be aware of the fact that stamp duty charges on property registration vary from state to state. There are multiple parameters used by the authorities to calculate charges such as involving the type of building or plot involved.

For example, some states consider the constructed area for calculating stamp duty and registration charges for independent houses while a figure is arrived at based on the built-up area in the case of apartments. The stamp duty can also be revised by states annually as per the state budget. In some states, women get a concession on both stamp duty and registration charges.

Here are some of the factors that you must keep in mind on the implication of stamp duty at the time of property registration.

  • The calculation is primarily done based on the “Guidance Value” of the property, the minimum value at which the property should be registered. The value is decided by the competent authority under the state government.
  • The charges are indirectly proportional to the market value of the property and other aspects such as market performance.
  • The location of the property such as urban or rural areas also has a say in deciding the stamp duty payable.
  • Other levies such as state and central taxes are also applicable on registration and stamp duty charges.

FAQs on Stamp Duty

1. What is the use of stamp duty?

Stamp duty is used as evidence for any sale or purchase of a property.

2. What happens if you don't pay stamp duty?

You have to pay the penalty of 2% per month on the deficit amount.

3. Can seller pay the stamp duty?

Yes, both seller and the buyer have to share the stamp duty equally.

4. What is the maximum exemption limit in stamp duty?

The maximum exemption limit in stamp duty is Rs. 1.50 lakhs.

5. What is the stamp duty rates in chennai?

The stamp duty rates in chennai are 7%.

News About Stamp Duty

  • Government of Karnataka reduces registration stamp duty for low-cost apartments

    The Karnataka Cabinet have made a decision to reduce the stamp duty on registration of apartments which cost between Rs.35 lakh and Rs.45 lakh. The fee has been reduced from 5% to 3%. This will offer a relief to all home buyers who want affordability. This is applicable for the first registration of the apartments and there is a proposal for upward revision of the guidance value. It is set to be examined by the specific committee constituted for the same. The Cabinet had approved the construction of four lakh houses in the rural areas under Dr BR Ambedkar Housing Scheme, Basava Housing Scheme, and also Devaraj Urs Housing Scheme.

    27 July 2021

  • ITAT announces 10% price-stamp duty variance relief on flat sale applies from 2002-03

    As per a recent ruling of the Mumbai bench of the Income Tax Appellate Tribunal (ITAT), the taxpayers have been relieved. The ITAT has announced that a benefit of 10% owing to the difference between the sale price of a flat and the stamp duty valuation of the flat will be applicable.

    The Income Tax Department had introduced Section 50C of the Finance Act 2002 to bar the abuse of tax and to stop the usage of black money in property deals. As per the terms of the law, if the stamp duty rate of a property deal is higher than the sale consideration claimed to be received by the seller of the property, the stamp duty will be considered for the calculation of the capital gains. The latest announcement comes as much-needed relief to the taxpayers.

    20 January 2021

  • Registration fee and stamp duty to be cut down in Kerala

    Finance Minister T M Thomas Isaac recently said in his Budget speech that with the intent of improving the position of the state of Kerala in terms of ease of doing business. In this regard, he has also announced that the construction of 3 industrial corridors will start in 2021-22 which will have a total capital investment of about Rs.50,000 crore.

    The state has cut down the Value Added Tax on CNG and LPG. The tax now stands at 5% which was previously marked at 14.5%. The stamp duty on sale deed has also been cut down to 4% from the 8% mark and the registration fee has been slashed down to 1% from 2%.

    18 January 2021

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