Stamp Duty and Registration Charges

Owning a house is a dream for many, and equally dreadful is the legal proceeding behind it. A home buyer can only become a true possessor of their property after they have gone through the registration process of their ownership. And just to get to that point, there are many factors, including location hunting, property selection, loan application, down payment, mortgage payment, agreement signing, and much more. It only ends with possession, registration, and transfer of the complete ownership to the buyer’s name. Lastly, the authentication that the property is transferred to the buyer ends in paying stamp duty.

 What is Stamp Duty?

Stamp duty is a tax levied on citizens of India who are involved in the purchase of property and real estate. This government tax is applicable as per section 3 of the Indian Stamp Act 1899. There is a requirement that stamp duty is paid in full and on time, failing which, the consumer would be liable to pay applicable penalties. Moreover, there is a high legal value associated with the document as they are accepted as a shred of evidence in courts. Property-related cases without any stamp duty are straight-up liable for rejection. They are primarily calculated based on the minimum rate set by the government for a property and the estimated value of the property. The price is calculated from whichever value is higher than the two. They usually vary from state to state.

Stamp Duty and Registration Charges in Different Cities across India

Stamp Duty and Registration charges vary from state to state. The data provided below depicts the rates across several states in India.

Factors Affecting Stamp Duty Charges

Several factors affect the stamp duty charges, and one of the biggest factors is the transaction value of a property.

Furthermore, the transaction value can be deduced from several sub-factors such as the property’s age, amenities it offers, location of the property, age of the buyer, purpose of the property, and so on. Here are some of the factors explained in detail.

• Property Location – One of the primary factors that affect the stamp duty charges is the property’s location. This is mainly because location majorly determines the value of the real estate. Prime metropolitan areas attract higher stamp duty charges as compared to remote areas.
• Purpose of the property – Another factor is the purpose of a property. Many would invest in commercial properties, which could incur higher stamp duty charges.
• Type of property – Generally, luxurious residential spaces attract more stamp duty payment compared to a regular apartment. Moreover, the purchase of plots and lands also has varied stamp duty charges depending on the area.
• Age of the purchaser – The age of the property owner can make a difference in the amount of stamp duty payable. For instance, a senior citizen might get discounted stamp duty charges.
• Gender of the purchaser – Various concessions is given to female real estate purchasers to promote equality in purchasing participation. These concessions vary from state to state. However, some states do not follow the gender difference in stamp duty charges.
• Facilities and amenities – Properties with better infrastructure and amenities will attract more stamp duty charges.

How to Pay Stamp Duty Online?

Stamp duty, is legal evidence of a property purchase the buyer must incur, this must be done concerning the state registrar. Generally, the payable stamp duty and registration charges can be paid from the official website of GRAS or the Government Receipt Accounting System. The correct way to make the payment has been explored in the pointers given below. This will benefit users in making their stamp duty and registration payments and help others do the same.

• Go to the official website of GRAS from your browser.
• You can create a new user account by clicking on Create New Account option.
• Those who have already registered can enter their login credentials and proceed
• After logging in, the dashboard will display all the relevant details about the user.
• Users must click the Make New Payment option to pay stamp duty online.
• There will be four options for the user’s category. Click on the Citizen option
• You can pay the stamp duty and registration fee together or pay the stamp duty separately.
• There will be an application form, which the user will be required to complete with the correct information.
• The form will incorporate the details such as department details, payment options, first-party details, second-party details, property details, property value details, and payment mode.
• After filling in the details, click on proceed.
• Review the details with the draft challan.
• Click on Agree and proceed.

Stamp Duty for Women

There are specialised rates for women for paying stamp duty and registration charges. These although isn’t applicable in every state, some states encourage female property owners. Below is the data showing the states offering special stamp duty rates for women.

Are Stamp Duty and Registration Charges Included in the Home Loan?

Buying a house comes with lots of paperwork and legal formalities. There will always be the necessity to take care of stamp duty and registration charges documents on a priority basis. This is imperative, as any delay could invite unnecessary penalties. Failing to pay any stamp duty charges means that there is no legality that one is an owner of a property. The registration fee is generally set as 1% of the property value. However, much can also depend on the state government and property type. To answer whether or not Stamp duty and registration charges are included in the home loan, one needs to understand that stamp duty and registration charges are overhead expenses. These are generally excluded from the home loan category. Customers are always advised to keep enough funds to meet their stamp duty and registration charges separately.

How are Stamp Duty Charges Calculated?

Stamp duty and registration charges are generally different regarding state-wise rates and property valuation. For example, sale deeds are kept at 4% to 10% of the property value. Furthermore, the registration charges are kept at about 1% of the property value. Now many will wonder how are stamp duty charges calculated. The usual answer will incorporate the higher circle rate or the actual transaction value, generally understood as the market value, which becomes the basis for further calculation. The circle rates are also known by many terms in many states, such as guidance value, guideline value, ready reckoner rate, and so on. This is the minimum rate decided by the state government under which no stamp duty charges will be considered.

To understand the calculation of the sale deed stamp duty charge, let’s assume that a property is evaluated at INR 1.5 crores and the circle rate for that particular state is kept at INR 1 crore. If the stamp duty rate is set as 5% in that particular state, the calculation will take place on the higher value among the market rate and circle rate. Here the higher value is the market rate. Thus stamp duty of INR 1.5 Crore will be INR 7,50,000. Adding to this calculation, there could be rebates for certain property types, customer categories, and location types.

Stamp Duty Calculator

If anyone wants to bypass the hassle of manual calculations of stamp duty and registration charges, they can simply resort to using a stamp duty calculator online. The stamp duty and registration charges calculator is an excellent AI-powered computation tool that provides a clear and real-time outcome of payable expenses. The Stamp Duty Calculator will incorporate information from the user, such as the value of the property and the state in which they have the property. Customers simply need to select their state and enter the market value of their property. The calculator will showcase the total payable stamp duty and registration charges in real time.

Property Registration Process In India

The property registration process in India can be tricky and confusing. There are various layers of prerequisites one need to take care of. Understanding what needs to be considered and what needs to be avoided will be beneficial. Generally, the property registration process in India can be divided roughly into seven steps. These will include basic preparation, calculation of stamp duty and registration charges, payment of stamp duty and registration charges, drafting and printing the sale deed, registration of the ownership in the presence of the sub-registrar, collection of the registered sale deed, and mutation of property.

Preparing Sale Deed

To start things off, the property buyer has to pay the complete payment to the seller as per the agreement. This is mandatory as the seller will only prepare the signed sale deed. It is also essential to ensure that the property is not under any kind of dues on loans, taxes, society dues, etc. This is because the sub-registrar will not be considering the property documentation if any dues are pending from the part of the builder or the seller. The legality of the property will only be valid until and unless there is a registered sale deed and stamp duty cum registration charges payment is transferred by the buyer.

Calculating Stamp Duty and Registration Charges

It is essential to calculate how much stamp duty must be paid. The higher the value, the circle rate will be taken for the stamp duty calculation. This can vary as per state policies. Here one can take professional advice or use a stamp duty calculator online.

Payment Transfer

Make the stamp duty payment. There are three ways in which one can pay the stamp duty. Firstly, one can use non-judicial stamp paper available from authorized stamp vendors. The sale deed can be printed on stamp paper. Secondly, one can use the Franking method. This can be done via banks which have franking machines. Stamp duty can be paid by cash or demand draft as well. Thirdly, one can also make the stamp duty and registration charges by using e-stamping. This is available online on the respective state’s stock holding corporation website. This is a government-appointed central record-keeping agency. This has to be submitted to authorized collection centers or specific banks.

Document the Sale Deed

The next step is to prepare the draft of the sale deed physically. This should incorporate buyer and seller details, payment details, and other necessary information. It has to be noted that there should not be any conditions. For example, complete ownership transfer rights should be mentioned. There is no third-party documentation allowed. Furthermore, witnesses should be signed in the document as well.

Sub-Registrar

Visit the sub-registrar office. There will be a requirement of pre-appointment to visit the registrar. Customers must bring their identification documents, which the sub-registrar will analyze. Moreover, biometrics and KYC will be taken as well.

Collect Sale Deed

Customers must collect the slip or receipt of their registrar visit. The initially submitted registration deed can be collected in about 15 to 20 days.

Documents Required for Payment of Stamp Duty and Registration Charges

When registered with the sub-registrar, the buyer will be asked to present various documents pertaining to their identification, property ownership proof, bank verification, and other aspects. These documents are essential for the authenticity of the person applying for registration. The primary documents required for payment of Stamp Duty and Registration Charges are as follows.

• Identification proof of the buyer, seller, and witnesses such as an Aadhaar card, Voter ID card, Driving Licence, and PAN Card of both buyer and seller
• Sale Deed
• Stamp Duty and Registration charges payment proof
• Proof of Ownership
• Passport-sized photographs
• Property valuation certificate and other property documents.

Consequences of Inadequate Stamp Duty?

Paying Stamp duty and registration charges is one of the essential steps when it comes to property registration. However, missing this part can invite several kinds of complications. This can be both legal and expensive as stamp duty is held in high regard in legal proceedings, and penalties are applicable if missing payments.

• Stamp duty papers are considered admissible documents in court case proceedings. Thus any property that lacks the stamp duty and registration payment may be subject to rejection.
• Unstamped registration paper does not hold legal validity and will be subject to further penalties.
• Deliberate avoidance of stamp duty and registration charges can be subject to prosecution.
• Anyone who tries to evade the stamp duty registration will invite a penalty of up to INR 5000. This can be seen as a means to fraudulent activity.

Frequently Asked Questions