What are the Stamp Duty Charges in India?

Buying a property is an essential milestone in our lives, but it comes with its fair share of financial obligations. Apart from the EMI (Equated Monthly Instalment), additional charges like stamp duty, registration fees, legal fees, and home loan charges must be considered.

Many aspiring homebuyers are unaware of these costs and find themselves unprepared when they embark on their property purchase journey. 

In this article, we have decoded the stamp duty charges in India. Understanding such would help you make informed decisions while purchasing a property and availing a home loan.

What is Stamp Duty?

Stamp duty is a type of tax levied by the state government on property-related monetary transactions (buy or transfer of property), payable under Section 3 of the Indian Stamp Act, 1899. All property buyers must pay the stamp duty charges, as it serves as proof that the transaction or agreement has been legally documented as is recognised by the Government. The amount of stamp duty payable for property purchases depends on the property's market value or transaction value, whichever is higher.

In simple words, stamp duty is the tax paid to claim the conveyance deed, title deed, sale deed, and power of attorney paper for a property. The exact amount is calculated based on the market value of the property and is determined by the state government. Factors such as location, age, and gender of the buyer, property usage, type of property, and project amenities can also influence the stamp duty charges. Stamp duty charges vary across states.

There are different types of stamp duty, including property stamp duty, documentary stamp duty, transfer duty, and mortgage duty. Each type is specific to a particular transaction or document related to property ownership.

Impact of Stamp Duty on Property Purchase

Stamp duty has several implications for property transactions and buyers:

• Increased overall cost: Stamp duty adds to the total cost of purchasing a property, affecting the buyer's budget and affordability. Investing in this extra cost while planning your finances is essential, especially if you are applying for a home loan.
• Financial planning: Understanding stamp duty is essential for effective financial planning. Using tools like a home loan EMI calculator, you can budget for both the loan and the stamp duty charges.
• Influence on property value: High stamp duty costs can influence a buyer's decision and impact the dynamics of the overall property market. Buyers may negotiate property prices or seek areas with lower stamp duty rates.
• Government revenue: Stamp duty contributes significantly to government revenue, supporting public services and infrastructure development. It is a crucial source of funds for local and state governments.
• Impact on home loan: When applying for a home loan, it is essential to consider stamp duty charges as part of your overall financing plan.
   

Stamp Duty Charges in India 

To give you a better understanding of the stamp duty charges across different cities in India, let's take a look at the table below:

Data as on 8 October 2024

What is the Property Registration Fee in India?

Apart from stamp duty, property buyers must also pay a registration fee. The government pays this fee to get the property registered under your name, which is separate from the stamp duty charges. The central government of India sets the registration fee, and it is uniform throughout the country. Generally, it amounts to 1% of the total property value, although it may vary depending on the purchased property type.

Do Home Loans Cover Stamp Duty Charges and Registration Fees?

No, stamp duty charges and registration fees are considered overhead expenses and are not covered by home loans. Setting aside enough funds to meet these expenses separately when planning for a property purchase is essential. To calculate the stamp duty charges applicable to your property, you can use an online stamp duty calculator that requires only a few details, such as the state where the property is located and the total value of the property.

What Happens if I Don't Pay Stamp Duty?

Failure to pay stamp duty within the scheduled time may lead to legal complications. Your ownership of the property won't be recognised by the Government. Additionally, penalties could be imposed for evading stamp duty. Generally, the penalty for non-payment of stamp duty ranges from 2% per month to a maximum of 200% of the deficit amount of stamp duty. 

Point to note: Stamp papers purchased in the name of either parties - buyer or seller - is valid for 6 months from the date of purchase.

How to Pay Stamp Duty?

There are three common ways to pay stamp duty in India:

1. Non-Judicial Stamp Paper: The most traditional method, where stamp papers equivalent to the stamp duty amount are purchased.
2. E-Stamping: Many states have adopted e-stamping, where payment can be made online, and the receipt serves as proof of payment.
3. Franking: A franking machine is used to print the stamp duty amount on the property document