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  • Stamp Duty

    What Is Stamp Duty?

    Stamp duty is a government 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.

    Documents which require 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 in India

    • Stamp duty revenue drops in Maharashtra

      After the demonetization of the Rs.500 and Rs.1,000 currency notes the Maharashtra government has seen a slump in the revenue generated from stamp duty. Mumbai, the state capital, has seen an average of Rs.12 crore being generated in stamp duty per day since the demonetization, the worst in three years. Mumbai being one of the top realty markets in the country saw a very pronounced decline in stamp duty. The averaged stamp duty revenue in Mumbai was Rs.20 crore per day till demonetization, post demonetization this figure dropped to Rs.12 crore. The decline in registrations and revenue has come as a shock, as the state saw a slight increase in real estate in October. Overall the state saw an average collection of Rs.58.3 crore till November 8th, post demonetization on November 8th this figure dropped to Rs.41.27 crore.

      28th November 2016

    • Assocham’s Latest Suggestion Aims at Real Estate Industry

      Assocham’s latest suggestion to further reduce the existence of black money to the people at Centre is to lower stamp duty steeply for residential as well as commercial property deals to stop people from undervaluing their purchases. This suggestion was made under the belief that the most benefitted from this step would be the people buying residential and commercial properties.

      16th November 2016

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