Stamp Duty – Stamp Duty Act, Rates, Payment & Tax Benefit

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Stamp duty is a tax levied by the government, paid to register an agreement which is done amongst buyer and seller. As Stamp Duty is levied by the state, so different states have different rules to charge stamp duty based-on percentage or on nature of the agreement.

What is Stamp Duty?

The tax that is levied by the state government on the documents, at the time of transfer of ownership of property between two or more parties. This tax is referred to as Stamp Duty. Stamp papers are valid for 6 months and can be bought in the name of any party, involved in the agreement.

Stamp Duty can be treated as In-direct Tax just like Goods and Services Tax.

What is Stamp Duty Act? 

The Indian Stamp Act, 1899 is a fiscal statute laying down the law relating to the tax levied in the form of stamps on instruments recording transactions.

Payment of Stamp Duty

When you buy Stamp there are some conditions associated with the payment.

  • Stamp Duty needs to be paid in full, any delay in payment will levy to a penalty at a rate of 2% per month, up to a maximum 200% on the remaining amount.
  • Stamp Duty has to be paid on the day of execution, within one day or before the execution of the agreement.
  • Stamp Duty mostly paid by buyer. But in case of property exchange, both (Buyer & Seller) are liable to pay equally for Stamp Duty.

Stamp Duty required on the Documents: 

Documents which require stamp duty are given below:

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

Stamp Duty Charges

As Stamp Duty levied by the state government, so the rates may differ from state to state across India. But in some cases, the government fixes the Stamp Duty rates. 

Stamp Duty on Property Registration

At the time of transfer of Ownership of Property between buyer and seller, it is required to pay Stamp Duty during the execution of the agreement. The government introduced the e-stamping in certain states like Delhi, Mumbai and Pune etc. for determining more accurate charges.

Stamp Duty Rates in Various Cities 

Stamp duty rates in various states is listed in the table below:

CITY STAMP DUTY %
In Mumbai 3% to 6%
In Bengaluru 2% to 5%
In Delhi 4% to 6%
In Kolkata 5% to 7%
In Pune 3% to 5%
In Hyderabad 4.00%
In Ahmedabad 4.90%
In Chennai 7%

 

Stamp Paper Execution 

  • Stamp papers need to pay in full and it can be bought in the name of the buyer or in the name of the seller and the validity of stamp paper is for only 6 months from the date of purchase, provided that the duty is paid on-time.
  • The individual executing the agreement has to write his name or initials across it to cancel the Stamp Paper. In case, this is not done through the above-mentioned method, so this agreement is considered unstamped and cannot serve as proof.

Factors Determining Stamp Duty Rate

There are many factors that help to calculate the Stamp Duty Charges, some of them are mentioned below:

  • Location: Location is the prime factor to decide the Stamp Duty Charges if the property is located in the Urban you have to pay more compare to the rural area.
  • Property Age: The age of property is also important to determine Stamp Duty if the property is old then charges will be low if the property is new then more charges will be imposed.
  • Gender & Age: Most of the states allow lower rates if the property is registering in the name of female, compared to Men’s. Some states also allow lower rates for senior citizens.
  • Purpose of Buying: Purpose of Buying is also important because Stamp Duty charges depend on the usage of the property, they are buying for commercial use or residential purpose. Commercial Property needs to pay more stamp duty due to several factors. 

Stamp Duty Calculator

Stamp duty calculators can be used to calculate Stamp Duty for different states across the nation. You just have to enter the details related to property.

Tax Benefits on Stamp Duty 

At the time of buying property individual pay big amount. The government has added some benefits to claim stamp duty and registration fee in Income Tax Return, which provides relief under Section 80C of the Income Tax Act, 1961. With that benefits an Individual can claim a Tax deduction for stamp duty and registration fee under Section 80C deduction which is up to Rs. 1.5 lakh.

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