Purchasing a home is one of the most significant financial decisions you will ever make. Both financially and emotionally, it’s a harrowing ordeal. When purchasing a home, we must first locate the property, make a down payment, apply for a loan, and sign the purchase agreement, among other things. Possession and registration of your property is an important and final step in the process of purchasing a home. It is your responsibility to get the property registered in your name after you have taken ownership of it. The article will tell you more about Stamp Duty.
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All About Stamp Duty in India
Stamp duty is proof that a property was purchased in the buyer’s or seller’s name, and it is valid for six months. It is a tax imposed on all legitimate real estate transactions. Stamp duty is required on a number of papers.
What is Stamp Duty, and How Does it Work?
Stamp duty is an indirect tax levied by the government on all lawful property transactions. As a result, stamp duty is a tax that serves as evidence of any acquisition or sale of real estate between two or more parties. Stamp papers, which must be purchased in the name of either the seller or the buyer, are valid for six months if the stamp duty is paid promptly.
Stamp Duty Act
The provisions of Section 3 of the Indian Stamp Act, 1899, govern the payment of stamp duty. In addition to providing validity to a document, stamp duty is collected to generate cash for local governments.
Payment of Stamp Duty
It is vital to note that stamp duty must be paid in whole and promptly, otherwise a penalty will be imposed. A legal document with evidentiary value is a stamp duty document (admissible in a court of law as evidence). Stamp duty must be paid before the document’s execution (signing by an individual’s party), the next day, or on the day of the document’s execution. In most circumstances, the buyer is responsible for paying stamp duty. In property exchange cases, however, stamp duty must be paid by both the seller and the buyer. An individual executing a specified instrument is required by Section 13 of the Indian Stamp Act, 1899, to cancel the stamp (adhesive) by putting his initials or name over it. The document is regarded as unstamped if a stamp is not cancelled using the aforementioned manner. To put it another way, the stamp must be visible on the instrument’s face and hence cannot be used on another instrument.
Charges for Stamp Duty
Because stamp duty is a state topic in India, stamp duty rates vary from state to state. The central government, on the other hand, sets the stamp duty rates for certain instruments. As previously stated, failure to pay stamp duty on time will result in a monthly penalty of 2%. (up to 200 percent of the remaining amount).
Stamp Duty on Property Registration
It is necessary to have legal proof of ownership or transfer of a property. In most circumstances, the buyer must register his or her name in the municipal records at the conclusion. At the time of registration, the buyer must pay stamp duty. The stamp duty amount may differ from one state to the next.The amount of stamp duty charged is also determined by whether the property is new or old.
Factors Affecting Stamp Duty Registration
- Age of the Property
- Value of the Property
- City or location of the Property
- Gender and age of the Property owner
- Usage of Property
Required Documents for Stamp Duty
- The following are some of the documents that need stamp duty:
- Transfer instruments
- Deed of partition
- Reconveyance of mortgaged property
- Mortgage deed
- Certificates of sale
- Gift deed
- Exchange deed
- Tenancy agreement
- Power of attorneys
- License agreement
- Lease deeds
Cost of the penalty
Any delay in duty payment will result in a 2% monthly penalty, up to a maximum of 200 percent of the stamp duty deficiency. Stamp papers must be purchased in the name of one of the parties involved in the agreement, i.e., the seller or buyer; otherwise, the stamp paper will be disabled. Only if the duty is paid on time is it deemed to be valid for six months from the date of purchase.
Stamp Duty Rates in Indian states
The following table shows the stamp duty rates in several states:
| 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) |
Top Cities Stamp Duty Rates
| City | Stamp duty rate |
| Mumbai stamp duty | 3%* |
| Pune stamp duty | 3%* |
| Hyderabad stamp duty | 4% |
| Chennai stamp duty | 7% |
| Bangalore stamp duty | 2% to 5% |
| Delhi stamp duty | 4% to 6% |
| Ahmedabad stamp duty | 4.90% |
| Kolkata stamp duty | 5% to 7% |
FAQ’s
In the absence of an agreement to the contrary, the purchaser/transferee is responsible for stamp duty, or in the case of property exchange, both parties are equally responsible for stamp duty.
Stamp duty is paid as proof of any property sale or acquisition.
On the amount of the shortfall, you must pay a penalty of 2% every month.
Yes, the stamp duty must be split equally between the seller and the buyer.
The maximum stamp duty exemption amount is Rs. 1.50 lakhs.
In Chennai, the stamp duty rates are 7%.