All You Need to Know about Stamp Duty and Registration Charges on Home Loan

When buying property, you must take care of many things. These might range from clearing debt to filing legal documentation. Stamp duty, registration fees, and other relevant requirements should be handled first. If these prerequisites are not cleared, you might face obstructions with your transaction.

This article gives a summary of stamp duty and registration fees related to real estate transactions.

What is Stamp Duty?

You are charged a property stamp when transferring ownership of your property to another person. According to Section 3 of the Indian Stamp Act,1899, you are charged this stamp fee to register your documentation. Every state has a varying stamp duty.

Stamp duty is charged by the state authority to confirm your registration deal. A registration certificate with a stamp duty payment tag works as legal proof in court. It is to verify your ownership of the property. One can only claim ownership of a property once stamp duty is paid. So, stamp duty is critical when buying or selling property.

It is often paid by the buyer regardless of the agreement, and in the event of a property exchange, both the seller and the buyer are required to bear the stamp duty equally.

What Does Home Loan Stamp Duty Entail?

Simply put, stamp duty is a valid tax levied on each sale or purchase of real estate to establish the property’s ownership. It is the tax levied on processing documents, including sale deeds, transfer deeds, and power of attorney. Once the stamp duty is paid, the buyer can claim these papers.

The amount due varies from state to state. The actual amount and the type of property you buy define the specific charges due on each document. The sum is calculated using the property’s value. Several factors besides state laws affect the stamp duty of an asset.

Factors that Influence the Cost of Stamp Duty

The amount of your stamp duty depends on a variety of factors:

• Age of the PropertyThe amount of stamp duty you pay is affected by the age of the property in question.
• Age of Owner
  Senior persons get a discount on stamp duty from almost all state governments. Thus, the amount of stamp duty fees you pay depends on your age.
• Gender of Owner
  Female homeowners also get a reduction in their stamp duty. This discount is only applied if their name was used when the property was registered.
• Type of Property
  Commercial buildings are more expensive than residential ones since they need more facilities, such as floor space and closed-circuit cameras. So, your stamp duty fees will be higher if your home is a commercial building.
• Location of the Property
  Properties located in suburban or municipal areas have a higher stamp duty. On the other hand, you will pay lower fees for properties outside towns and cities.
• Amenities
  The state government is allowed to tax you for any extra amenities. These are checked when you register your property. Elevators, swimming pools, libraries, clubs, town halls, and gyms are a few of these facilities.

How Much Does It Cost to Register a Property in India?

The registration fee is the cost you pay to the government to get the property registered in your name. You need to pay this sum besides the stamp duty fees. The Indian Registration Act of 1908 includes legislation for property registration.

The federal government of India sets the registration cost, making it a national standard. The charge usually equals 1% of the entire property value. But remember that the fee amount may vary based on the property.

How Are Stamp Duty Fees on Home Loans Determined in India?

• A property’s value is used to find how much stamp duty should be paid.
• This fee is calculated on the property’s market value and some other elements. It also includes the property’s type, location, age, number of floors, etc.
• Property valuations are made public by the relevant state government. You can access this data through the registered stamp duty ready reckoned of your state. 
• Then, the authorities compare the circle rate and the home loan stamp duty. After that, they choose to charge stamp duty on home loans based on the greater value.

Stamp Duty Calculator

The stamp duty calculator makes it simple to check your property’s stamp duty fees. By entering a few parameters, the online calculator provides you with an approximate cost. To find out the amount, enter the status of the property and its total value.

Tax Advantages of Stamp Duty and Registration Fees

According to Section 80C of the Indian Income Tax Act, your registered stamp duty and registration fee are tax-exempt. According to the tax code, you can claim a tax exemption of Rs 1.5 lacs when filing your income tax return.

If you share the property with another owner, you can file tax returns and receive a tax credit. Joint ownership of a property can grant a tax exemption of up to Rs 1.5 lacs.

Conclusion

To buy a house in an educated and clear manner, you must do proper research and plan your finances well. Now that you know about stamp duty and registration fees, you can also make an informed decision about all the home loan charges. Take into account these costs and fees when applying for a home loan on Piramal Finance. With Piramal Finance, you can find the best financial services and products and learn more about such topics.