by Anushree Ghosh
Understanding how stamp duty charges are calculated
Introduction to the need for buying a property, therefore, bringing us to the question of getting the property registered in the name of the buyer, how stamp duty is levied on the property, factors affecting stamp duty charges, resale and transfer of property, what happens in case the buyer cannot pay stamp duty.
Owning a house is one of the most prominent dreams of many Indians. Many save money for years to be able to buy one— it is an investment to secure the future. Apart from the lump sum amount that you have to give away at once, there are many other cost elements that you need to consider. It is important to get the property registered in your name, with the local municipal authority. It must be documented in the records of the authority, the required papers should mention the buyer as the owner. To acquire these legal documents, you need to pay the stamp duty and register the property in your name.
Stamp duty is a kind of tax, charged by the state or central governments. After buying a property, it is mandatory to pay stamp duty which is calculated on the value of the transaction. It is applicable on commercial, leasehold and residential properties.
Stamp Duty Charges
The amount you will pay as the stamp duty will differ from state to state. Some states have this provision of heavy discounts if the buyer is a woman. Therefore, if you wish to save some money on stamp duty, you can opt to purchase the property in the name of any female member of your family. Then, location also plays an important role in deciding the total stamp duty amount, you can hunt for a property that is located in the zone that has the lowest stamp duty. Stamp duty on a property depends on several factors— status of the property, age, gender, and usage of the property.
Stamp duty charges for a resale flat is 5% of the total property cost. It is calculated on the kind of agreement value or with the help of ready reckoner rates pre-decided by the government. The buyer will pay whichever is higher. In case of transfer of property, you still have to pay the stamp duty, which can be anything between 1-8% depending on the state where you live. If the property is being gifted to a non-relative, stamp duty could vary from 5-11% and it decreases to 2-8%, in case of such situations.
Payment of insufficient stamp duty charges is punishable under law. You can be asked to pay something between 8-20 per cent, awarded with imprisonment for a limited period. There can be a concession for pensioners, first home buyers, family farms or farmers.