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 property transactions that are legal. There are a number of documents which require stamp duty.

What is Stamp Duty?

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 bought either in the name of the seller or buyer is 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 which has evidentiary value (admissible in a court of law as evidence). Stamp duty has to be paid prior to 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 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 cancelled 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, delay in the payment of stamp duty will attract a penalty of 2% on a monthly basis (up to 200% of remaining amount).

Stamp Duty on Property Registration

Legal evidence of ownership or transfer of a property is mandatory. To the end, the buyer, in most cases, has to register his or her name in the municipal records. The buyer has to pay a 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

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)

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 on the basis of the built up area in 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 on the basis of 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 area 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.

News About Stamp Duty

  • Maharashtra government cuts down stamp duty to 2% till the end of the year to boost demand

    In order to help boost the stagnant real estate market which has been affected heavily by the Coronavirus pandemic and the lockdowns following the same, the state government of Maharashtra has recently announced that is has decided to slash down the stamp duty for housing units from 5% to 2% till the end of the year.

    The decision was taken and announced on 26 August 2020 by the government. The stamp duty will be low in the following quarter as well as per the announcement. However, it will be 3% from 1 January 2021 to 31 March 2021. The decision was taken in a state cabinet meeting which was held on the 26th of August 2020. The state has announced this following the requests coming from real estate developers for the reduction in the stamp duty following the lockdown which will help boost the interest among homebuyers to buy new properties during this situation.

    27 Aug 2020

  • Stamp duty waived off by Andhra Pradesh, registration fee cut for 10 GW of Solar Projects

    An order has been issued by The Government of Andhra Pradesh allowing the stamp duty to be exempted and reducing the registration fee for lands for the development of solar projects.

    The registration fee has been reduced to Rs.1 on every Rs.1,000 of the value of the document on land deeds entered by AP Green Energy Corporation Limited (APGECL) with the owners of the land.

    The Revenue Department were requested by The Energy Department of Andhra Pradesh to waive the stamp duty and decide the registration fee for the lease, purchase, and resumption of land for solar projects.

    The final implication of the proposal was submitted by The Registration and Stamps Department of Andhra Pradesh and stated that the total land available for the projects is 28,014.7 acres. The stamp duty which should be charged is Rs.151.3 million, while the registration fee is Rs.1,120,580. Based on this, the total financial cost of the proposed move comes to Rs.152.4 .

    21 Aug 2020

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