Planning to Buy a Home? Know the Stamp Duty Charges First

buy a home

Living in a house of your own may be your dream. But the process of buying a house can seem cumbersome. There is a lot of paperwork involved and there are mandatory charges to be paid. For instance, stamp duty and registration charges are among the costs you incur when buying a house. Here’s a closer look at what stamp duty is and how much you could expect to pay.

What is Stamp Duty?

Stamp duty is a charge that you would be liable to pay when transferring the title of a property from one person to another. Such a transfer may take place when you are buying or selling a property, for instance. You can expect to pay this when buying land or a house anywhere in India. The charge acts as a validation of your property purchase. It is a key part of the property registration process. You can claim legal ownership of the property only when the stamp duty is paid.

Keep in mind that the stamp duty is charged by the state governments in India. So, the amount applicable to a transaction differs from one state to another. In general, the stamp duty charges vary from 5% to 12% in states across India.

What are the Factors that affect Stamp Duty?

State government officials usually publish a Stamp Duty Ready Reckoner on 1 January every year. This reckoner is used to affix a value to the property. Aside from this, the following parameters are taken into consideration while calculating stamp duty charges:

  • Age of Property: An older property attracts less stamp duty than a newer one.
  • Age of Owner: Senior citizens are charged stamp duty at subsidised rates.
  • Gender of Owner: Properties registered in the name of a woman attract a discount on stamp duty charges.
  • Type of Property: Commercial properties attract a higher stamp duty than residential ones. Also, there are different rates for apartments in multi-storied buildings and standalone houses.
  • Location of Property: A property in an area covered by a municipality typically draws a higher stamp duty than properties that fall under panchayat limits. The state in which the property is located also plays a role.
  • Total Value of Property: The higher the value higher, the higher will be the stamp duty and registration charges. Here, ‘value of property’ means the market value or agreement value, whichever is higher.

You could also use a stamp duty calculator to assess how much you are liable to pay.

What is the Procedure to Pay Stamp Duty?

There are three ways to pay stamp duty:

  • Non-judicial Stamp Papers

This is the most popular way of paying stamp duty. All agreement details are entered in a non-judicial stamp paper. The paper must be bought only from a licensed vendor and its value must equal that of the applicable stamp duty.

  • Franking

Only some banks may carry out franking transactions. They may charge a fee for this service. Here, the agreement details must be included on a paper while submitting the stamp duty amount. The bank will use a franking machine to place an adhesive stamp that is equivalent to the value of stamp duty.

  • E-stamping

The digital mode of paying stamp duty offers a high level of security. But the facility is available only in some cities. Here, you must log on to the website of Stock Holding Corporation of India Limited (SHCIL). Now, pay the duty online or submit the amount at an SHCIL branch office. You will receive an e-stamp certificate upon completion of the payment.

Conclusion

Stamp duty must be paid for all kinds of property to authenticate ownership. But make sure to do the valuation correctly and pay the right amount. If you undervalue your property to pay lower stamp duty, you could face a heavy penalty.

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