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Know about the Stamp Duty and Property Registration Charges in the Real Estate Aspects

November 10 2017

Know about the Stamp Duty and Property Registration Charges

While purchasing a new house is considered a lifetime achievement task, there comes another tedious process before you finally relax! There are certain taxations and paperwork you need to do prior to setting up your new home. They are the Stamp Duty and Registration Charges for the property you bought.

Briefing Stamp Duty & Registration Charge

Buying a house merely doesn’t mean it belongs to you. It must be properly registered with the government to confirm your possession legally. Besides, the government levies a compulsory tax on property as a legal evidence that the property belongs to you, which is called the “Stamp Duty”. The 1908 Registration Act states that when the purchaser buys/transfer the property, he/she should pay the registration charge for the property. To put it simply, ‘Stamp Duty’ and Registration Charges are the paperwork transaction done in confirmation of owning a property.

As a buyer, it is your responsibility to pay the tax and register your home with the government in order to avoid legal complications. The registration charge has to be paid separately at the respective Registrar/Sub-Registrar’s Office after the payment of Stamp Duty. Normally, the registration fee is charged at 1% of the total property’s value, whereas the stamp duty differs from state to state.

For instance, the Stamp Duty in Chennai is 7% of the market value of a property, whereas, in Bangalore, one has to pay about 5.6% of the total property value as the Stamp Duty..

On What Basis a Stamp Duty is levied?

Depending on the value of a property, the Stamp Duty is imposed by the government. Each state decides its own rate for the property based on its type, usage, market value, and ownership status. It is under Section 3 of the Indian Stamp Act- 1989 that the stamp duty must fully be paid in one term within the prescribed time limit. In case there is a delay, you will be liable to pay the penalty of a minimum 2% to maximum 200%. One has to remember that the non-registration of any property will be declared null and void by the government.

How is Stamp Duty Paid?

You can pay the stamp duty in three distinct ways such as
In brief, E-stamping is the payment of tax done online either through RTGS or NEFT. However, it is not applicable in all states. If the registration is done with the executor’s approval at the registrar’s office, this procedure is called the non-judicial stamp paper method. The Franking method is in which the documents are processed by an authorized bank using a franking machine. To be noted is that the registration charges and Stamp Duty should be paid for all kinds of properties, whether it is commercial, or residential. The resale properties are also placed under this cap, which means, you can’t simply avoid it for the properties you resale after a certain period of time.

Stamp Duty Calculator

Stamp Duty is calculated based on the above-mentioned categories such as market value, type, location, etc. Between the agreement value of a property and the circle rate (the minimum value of a plot/apartment which is for sale/transfer), the Stamp Duty is calculated on the higher value. It’s like if your agreement value of the property is Rs.60 lakhs, while its circle rate is Rs.50 lakhs, then the Stamp Duty for the property would be Rs.60 lakhs or whichever is higher. To calculate your own Stamp Duty charges, check our online stamp duty calculator and know further more information about it.

In this competitive world, buyers should be aware of all the deals of purchases made, might it be small or large. Big-ticket items like a residential property or house require an extra vigilance before investing. Buying a title insurance for your new home/ property will prevent you from facing any legal proceedings in case of a defect or loss in the market value. To protect yourselves and your property from any loss in the housing market, buying a title insurance is indeed necessary.
To calculate your own Stamp Duty charges, check our online stamp duty calculator and know further more information about it.
For reference, check the Stamp Duty charges in some of the top Metro Cities below.

S.No City Stamp Duty (of total Property Value)
1 Chennai 7%
2 Bangalore 5%
3 Hyderabad 4%
4 Mumbai 6%
5 Pune 6%
6 Delhi 3-5%
7 Kolkata 5-6%

Documents at hand for Property Registration & Stamp Duty Payment

One needs to keep the following documents at hand in order to register a property and pay the Stamp Duty.

  • Signed & Paid receipt of the Stamp Duty
  • Any of the ID Proofs from the lists: Aadhar Card, Pan Card, Driving License, Passport, Voter ID, etc.
  • Another ID proof by witnesses
  • Paid Tax receipt for the past 3 months
  • No Objection Certificate
  • Tax Clearance/No Due Certificate
  • Power of attorney, sale deed, conveyance deed and other relevant property documents
  • Electricity Bill
  • Pattadar Passbook
  • Passport Size Photographs- 2

To sum up, this is all the general summary of the Stamp Duty and Registration Charges with respect to the property. Stay tuned for further more important details and recent updates of the Stamp Duty and Registration Charges.