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Buying a house in India is unarguably one of the best decisions of your life. After all, nothing is more comforting than having a property of your own. But while purchasing a property in India, you must always remember the additional costs that come along.
While paying for parking space and maintenance is one kind of expenditure – that you can always negotiate, stamp duty charges and registration charges are another kind of mandatory expense that you have to bear with to complete your home buying formalities.
In this article, we will describe what stamp duty and registration charges are, how they are calculated, the ongoing stamp duty and property registration rates in India, and how you can save money while paying these tax.
” The government levies a compulsory Stamp Duty and Registration Charges on all residential and commercial property transactions. Different state governments charge different stamp duty and registration fees from home buyers. We examine the current charges and how to save money while paying this tax “
What is Stamp Duty?
Stamp Duty is a form of direct tax levied by the Government on India on all documented financial as well as residential and commercial property transactions. It is to be paid by homebuyers to attain the legal ownership of the property. Since it is charged by the states, the charges vary from one state to another.
The stamp duty charges are excluded from your home loan amount by real estate financing companies and are thus to be paid by your own pocket.
How is Stamp Duty Rate Calculated?
Stamp duty on property is calculated on the value that is higher between the value of the property, as mentioned in the sales agreement, and the Ready Reckoner rate. It depends on:
- The status of the property – old or new
- Usage of the property – commercial or residential
- Location of the property – rural, urban, metropolitan, or sub-urban
- The age and the gender of property owner – rebates in stamp duty rates are offered to women and senior citizens
- Type of the property – flat or independent house
What is the Registration Fee on Property?
Over and above the Latest stamp duty charges, home buyers need to pay the registration fees too. It is usually calculated at 1% of the total cost of the property. The rules for registration fees too vary from state to state.
For example, if you buy a house in Mumbai, you need to either pay 1% of the total amount of the property or Rs 30,000, whichever is less. However, for buying property in Kolkata, the rule is flat 1% of the value of your property.
The Current Stamp Duty and Registration Rates in Various Cities
As mentioned above, stamp duty is a state government levied tax and therefore the rates vary from one state to another state. While some states charge low, other states charge heavy taxes from home buyers and you must always calculate and add these charges to your final purchase amount to ensure you do surpass your budget while purchasing a property.
Below are the ongoing stamp duty and registration rates across various states in India:
|City||Stamp duty rate||Registration charges|
|Mumbai||3% to 6%||1% of the property value or Rs 30,000, whichever is less|
|Pune||5% + 1% surcharge||1% of the property value or Rs 30,000, whichever is less|
|Delhi||4% to 6%||1% of the market value of the property|
|Hyderabad||4.00%||0.5% of the saleable value|
|Chennai||7%||1% of the market value of the property|
|Bengaluru||5%||1% of the market value of the property|
|Ahmedabad||4.90%||1% of the market value|
|Kolkata||5% to 7%||1% of the market value|
How to save money while paying these taxes?
There are various ways through which you can save a substantial amount of money on these government-levied taxex. These include:
- Buy property in the name of female members of the family: Most of the states offer significant discount to female realty buyers. To save money, you can consider buying property in the name of some female member of the family.
- Select property location wisely: Before finalizing the property, always compare the stamp duty rates with various other locations to benefit from the price variation.
- Ask your developer to bear the cost: Sometimes, to strike a good deal, real estate developers agree to pay the stamp duty and registration charges on your behalf. Check if your realty developer agrees to do the same.
However, under no circumstances, you should agree to show the undervalue price of your property. This is a criminal offence and you can be heavily penalized for such tax evasions.
For more details, walk into your nearby property registrar office or contact experts at Address of Choice today!