Stamp Duty​ and Property Registration Charges

What is Stamp Duty?

Stamp duty on Home Loan is a legal tax payable that acts as an evidence for property related transactions. This tax is charged by the state government and its rates are different across all states. Section 3 under the Indian Stamp Act 1899 mandates stamp duty payment for all who wish to register their properties. 

There are several costs associated with the Home buying process aside from the Housing Loan, such as the stamp duty. In many Indian states, stamp duty ranges from 5% to 7% of the property's actual value. Note that no lender covers stamp duty charges under the purview of your approved loan amount. 

When you pay your stamp duty along with the property registration charges, it serves as a legal proof that declares your ownership of the property in any court of law. 

Read on to learn the factors that define the stamp duty. 

When is the stamp duty payable?

The Stamp Duty charges for a Home Loan agreement are supposed to be paid before the execution of transactions. You can also pay the stamp duty on the next day (must be a working day) of the date of execution of the transaction. Any further delay in stamp duty payment may result in a penalty. 

What is the penalty charge? 

Any delay in the payment of stamp duty attracts an extra charge from the home buyers, which is often referred to as the penalty charge. This is usually 2% per month and can extend up to a maximum of 200% of the deficit amount. So, it would be prudent for property buyers to pay the necessary stamp duty charges on time. ​

Does everyone pay stamp duty?

As a home buyer in India, the government has made it mandatory to pay the stamp duty and registration charges for a Housing Loan. This fee is levied by the state government and not the lender. It validates you as the rightful owner of your property.

Read Also: Types of Housing Loan Charges 

Documents Required for Stamp Duty 

• ​​​Transfer instruments​​ 
• ​​​Reconveyance of mortgaged property​​ 
• ​​​Deed of partition​​ 
• ​​​Certificates of sales​​ 
• ​​​Exchange deed​​ 
• ​​​Gift Deed​​ 
• ​​​Tenancy agreement​​ 
• ​​​License agreement​​ 
• ​​​Power of attorneys​​ 
• ​​​Lease deeds​​ 
• ​​Mortgage deed​ 

Factors that Affect Stamp Duty Charges

A host of factors determine whether your stamp duty will be high or low.

• Property’s Age: The age of the property in question plays a vital role in determining the stamp duty you will pay.
• Owner's Age:  Nearly all state governments offer concession on stamp duty for senior citizens. So, your age determines the amount you will owe as stamp duty charges.
• Owner's Gender: Female homeowners, just like senior citizens, enjoy a discount on their stamp duty. This happens only if their name is used in the property's purchase and registration.
• Property Type: You will pay higher stamp duty charges if your property is a commercial building. Commercial buildings rank significantly higher than residential buildings, stamp duty-wise, as commercial buildings demand more amenities, such as floor space, and closed-circuit cameras.
• Property’s Location: Properties sited in a municipal area or a suburban area should expect a higher stamp duty. Buildings on the outskirts of town and city will incur a lower stamp duty fee
• Amenities: The state government is backed by law to levy you with every extra amenity it finds on your property during the registration process. These amenities are not limited to the following: elevators, swimming pools, library, clubs, town halls, and gymnasiums.

Read on to learn more about the mortgage registration charges that you have to pay alongside the stamp duty.

What is a Stamp Duty Calculator and How to Use it?

​A stamp duty calculator helps you determine how much you owe the state government in terms of stamp duty charges. 

To calculate the stamp duty charges, you can use the Bajaj Housing Finance Calculator. You just have to select the state where your property is located from the drop-down menu and enter the property value. The stamp duty percentage and charges will be displayed promp

What are Property Registration Charges?

Property registration charges also go towards registering your property legally at the time of the sale transaction. It is usually valued at 1% of the property’s cost. For example, a property bought at Rs.20 Lakh will incur a registration charge of Rs.20,000.

Just like stamp duty, property registration charges are also not covered by the Home Loan sanction amount.

​Additional Read: What is a Home Loan Sanction Letter? 

How to Pay Your Stamp Duty and Property Registration Charges?

Now that you know what stamp duty is and how it’s determined, here’s how to pay:

1. Estimate your property's value and calculate the stamp duty
2. Purchase non-judicial stamp papers from an authorized seller if you want to pay offline
3. In case you want to pay online, you can visit the official website of your respective state government and follow the instructions

Use our online stamp duty calculator to get one step closer to owning your dream home.

Claim Tax Benefits on Stamp Duty 

When purchasing a house, a buyer is eligible to claim tax deductions on stamp duty and registration charges or any property transfer-related expenses under ​​Section 80 C of the Income Tax Act. Accordingly, they can get a deduction of up to Rs.1.5 lakhs. Both individuals and HUFs are eligible to claim these deductions. However, it is essential to note that you must claim the tax in the same financial year as the one in which you are purchasing or constructing the house.​