Stamp Duty and Registration Charges
More than buying a property, registering it can be taxing. If you are planning on buying a property, remember that the amount quoted to you by the seller is not the final price you have to pay. Easily, few lakhs get added to the price quoted to you when you’ll register it on your name. Did you know that you will be charged stamp duty and registration charges, cess, and surcharges when you pick a property? Yes, all the charges put together can come up to 7% to 10% of the total market value of the property or more than that. In most states in India, 5% to 7% of the total market value of the property is charged as stamp duty while 1% is charged as registration fee.
Stamp Duty and Registration Charges in Different Cities
|City||Stamp Duty Charges||Registration Charges|
|Delhi||1% of the total market value of sale deed plus Rs.100 pasting charge.|
|Mumbai||1% of the total market or agreement value of the property or Rs.30,000 whichever is lesser.|
|Bangalore||1% of the property value.|
|Chennai||1% of the market value of the property.|
|Kolkata||1% of the total cost of the property.|
What do You Mean By Stamp Duty?
While transferring the title of your property to another person, you will be charged property stamp duty. This is a fee that is levied by the state government on the documents you need to register your property. Stamp duty and Registration Charges differ from one state to another. You will have to pay Stamp duty while registering a property as it is mandatory under Section 3 of the Indian Stamp Act, 1899.
The state government collects stamp duty to validate your registration agreement. A registration document with a stamp duty paid tag on it acts as a legal document to prove your ownership of the property in the court. Without paying stamp duty charges, one cannot claim the property to be his/her own legally. Thus, it is essential to pay the full stamp duty charge.
Factors that Determine Your Stamp Duty Charges
- Age of the Property: The age of the property plays a crucial role in determining the stamp duty charges you will be required to pay. As stamp duty charges are calculated as a percentage of the total market value of the property, old buildings usually attract less stamp duty charges and new buildings attract a high charge. This is because the market value of old buildings would have depreciated.
- Age of the Owner: Almost all state governments have subsidised stamp duty charges for senior citizens. So, the age of the owner plays a vital role in determining the charge.
- Gender of the Owner: Like senior citizens, women in our country also get a discount on stamp duty charges if the property is registered in her name. Men pay about 2% extra to get their property registration documents stamped when compared to women.
- Purpose: Commercial buildings attract a high stamp duty fee when compared to residential buildings. This is mainly because commercial buildings would need a lot of amenities, floor space, and security features.
- Location: If your property is located in a municipal locality or an upscale urban area, be prepared to pay a high stamp duty. If your property is located in Panchayat limits or outskirts of the town, you will land up paying less to get it stamped.
- Amenities: Did you know that the government will charge you for every extra amenity you have on your premises while registering the property? Yes, the government has a list of over 20 amenities that you will have to pay extra for if you have them on your property. Some of the amenities are lifts, swimming pool, library, club, gym, community hall, and sports area.
How is Stamp Duty Charges Calculated?
As mentioned earlier, many factors determine the stamp duty charge you’ll land up paying. The bottom line is that the stamp duty charge is calculated:
- considering the total market value of the property. If the market value of your property is high, you will land up paying a high charge and vice versa. In case you have both the market value and the agreement value of the property, whichever is higher will be charged.
- Apart from the cost or the value of the property, the type of the property, location of the property, gender and age of the owner, usage of the property, and the number of floors in the property all determine the property registration fee and stamp duty charges.
- Generally, stamp duty officials use Stamp Duty Ready Reckoner to fix the value of the property. The Stamp Duty Ready Reckoner is published by the concerned state government every year on 01 of January.
Stamp Duty Calculator
If you want to calculate the stamp duty charge you will be asked to pay, consider using one of the many online stamp duty calculators available. In a few seconds, you will be able to get an idea of the amount you will need to get your property registered. All you have to do is:
- Enter necessary information about your property like the state the property is locating in and the total value of the property and hit on the “Calculate” button to get your answer.
- You can also use a property registration fee calculator online if you wish to know the registration charges.
- Add cess and surcharges to get the total amount you will need to register your property.
- If you are unable to use an online calculator, walk into the nearby property registrar office to find it out.
Documentation Required for Payment of Stamp Duty and Registration Charges
- Sale deed in the name of the seller
- Khata certificate
- BBMP extract certificate
- Tax paid receipts of the last 3 months
- Registered development agreement (If in case of Joint Development Property)
- Power of attorney/s if any
- The joint development agreement, GPA, & Sharing/supplementary Agreement, between landowner and builder
- A Copy of all registered previous agreements (in case of resale property)
- RTC (Records of Rights and Tenancy Corps) or 7/12 extract
- Conversion Order issued by the concerned Authority
- Latest bank statements in case of any outstanding loan amount
- Certificate of encumbrance up to the current date
- Sale agreement
- Electricity bill
- NOC from Apartment Association
- Sanctioned building plan
- Occupancy / Possession certificate from the builder
- Title documents of the landowner
- Photocopy of Society share certificate & Society registration certificate
Procedure For Payment Of Stamp Duty And Registration Charges
There are 3 ways in which you can pay stamp duty. They are:
- Physical stamp paper
You must remember that all states will not have all 3 methods. In case all 3 ways are available, you could choose the method that suits you.
Purchase Of Physical Stamp Papers:
This is the most traditional way of paying stamp duty and registration charges. Here, you purchase non-judicial stamp paper from an authorised vendor. Non- judicial stamp paper are papers that have impressed stamps. Once you purchase the stamp paper, the transaction details can be written/typed on them. Finding a vendor selling this type of stamp papers is no easy job. Also, many a time there is a shortage of such paper. If the stamp duty that has to be paid is a high amount, then you might require many stamp papers. So, this method is not preferred by many.
To avoid counterfeit stamp papers and to make stamping easy, the Government introduced e-stamping. In some states, e-stamping is compulsory. E-stamping is permanently stamping done online. Stock Holding Corporation of India Limited (SHCIL), has been appointed as the official vendor for e-stamping and is also the Central Record Keeping Agency for all the e-stamps that are used in the country.
To do e-stamping, you have to visit the SHCIL website. Choose your state to see if e-stamping is allowed. You will get information on the transactions that you must e-stamp and the list of collection centres that will issue certificates to those who e-stamp. Fill up the application form and give it to the collection centre along with the money for the stamp duty.
There are several ways you can pay such as through Debit Cards, Credit Cards, cheque, demand drafts and online banking. Once you pay the stamp duty, you will get the e-stamp certificate. This certificate will come with a unique certificate number (UIN) that will have the issue date.
The benefit of e-stamping is that it is convenient. Another benefit is that the authenticity of your e-stamp can be verified online using the UID number. However, the issue with e-stamping is that a duplicate of your e-Stamp will not be issued.
This is a process where an authorised franking agent will put a stamp on your document indicating that the stamp duty has been paid. Before you execute the transaction for which stamp duty has to be paid (typically this will be before signing on the document), you should approach an authorised bank who will act as a franking agent, or a franking agent to deposit the stamp duty. Once you pay the stamp duty, a franking machine will be used to stamp the document with a special adhesive.
Every state will have a minimum amount prescribed for franking. For instance, minimum franking charges in Bengaluru are pegged at 0.1% of the agreement value. So, if you are buying a house for Rs. 50 lakhs, you need to pay 0.1% or Rs. 5,000 as charges for franking.
This fee will, however, be adjusted against the stamp duty at the time you execute the sale deed. Say, if the stamp duty for the sale deed is 5.5%, then, you need to pay only 5.4% because you already paid a franking charge of 0.1%.
Registration Of Documents After Paying Stamp Duty
Once you pay the stamp duty, the document has to be registered under the Indian Registration Act with a sub-registrar. This registrar should be of the jurisdiction where the property is situated if the transaction involves property purchase.
The fundamental purpose of registration is to record the execution of the document. Only when you register the document, it becomes legal and the ownership, if any, is transferred to the right owner.
The registration fee is a fee that is over and above the stamp duty. This fee varies from state to state. For example, the registration fee in Karnataka is pegged at 1% of the value of the transaction.
What Happens, If You Pay Inadequate Stamp Duty?
It is not lawfully right to pay less stamp duty for your property. It is required by law, that you pay the right stamp duty when getting your property registered. Many people undervalue their property and quote a low market value to escape paying high registration fees and stamp duty charges. However, it is not advisable to do so. If caught, you will be asked to pay a huge penalty and can even be imprisoned. Also, if you are a commercial builder, your reputation will be at stake.
For more details on stamp duty charges, walk into the nearby property registrar office or talk to a registered property consultant today.