Decoding Stamp Charges: Meaning, Rates, and much more

Purchasing a home can be an overwhelming experience. It is one of the most significant investments a person makes in his lifetime. Other than investment, buying a home requires careful planning. You will need to devote time to shortlisting properties, locating a suitable lender, arranging for a down payment, and understanding the various fees associated with home purchases. The most well-known of these fees is stamp duty.
 

What is Stamp Duty?

Stamp duty is an indirect tax levied by the government on legal papers used to transfer real estate assets. The amount you pay here serves as evidence of an acquisition or transfer transaction between you and the other party (buyer/seller).
 
Stamp papers are valid for six months as long as the duty is paid on time. The payment for stamp duty must be made per Section 3 of the Indian Stamp Act (ISA), 1899. In addition to being a legal property document, stamp duty is a major source of revenue for the state government.
 

Factors Affecting Stamp Duty Charges

 

1. Property Location

   The location of the property is critical in determining stamp duty charges. The rate will differ depending on whether the property is located in a rural or urban area. Apart from that, stamp duty varies by state. Here is a table that explains everything.
    

   Charges		State & Charges		State & Charges
   Arunachal Pradesh	6%	Andhra Pradesh	5%	Chhattisgarh	5%
   Assam	8.25%	Bihar	5.7-6.3%	Goa	3.5-5%
   Gujarat	4.9%	Haryana	5-7%	Jammu and Kashmir	5%
   Jharkhand	4%	Karnataka	2-5%	Madhya Pradesh	7.5%
   Kerala	8%	Maharashtra	5-6%	Meghalaya	9.9%
   Manipur	7%	Mizoram	9%	Odisha	4-5%
   Punjab	5-7%	Nagaland	8.25%	Rajasthan	4-5%
   Sikkim	4-10%	Tamil Nadu	7%	Tripura	5%
   Uttar Pradesh	7%	West Bengal	6-7%	Uttarakhand	3.75-5%

    

Disclaimer: Stamp duty is subject to revision. You must cross-verify the rate with the official website of your state government.
 

1. Gender

   Some states offer special discounts to female buyers to promote women's empowerment. However, the discounted rates are subject to certain terms and conditions. For example, in Maharashtra, if a female buyer transfers the property to a male within 15 years of ownership, the concession is revoked, and the difference must be paid in the prescribed manner. 
    
   Some states offer discounted rates to women buyers, including Haryana, Karnataka, and Maharashtra.

 

1. Property value

   Another vital factor in determining the property rate is the property value. For example, Goa has four slab rates: 3.5% for properties worth less than Rs 50,00,000, 4% for properties worth between Rs 50,00,000 and Rs 75,00,000, and 5% for properties worth more than Rs 75,00,000. Similarly, in Karnataka, property valued above Rs 45,00,000 is subject to a 5% stamp duty, while property valued below Rs 20,00,000 is subject to a 2% duty.

 

1. Property type

   The type of property, whether commercial or residential, also plays a role in determining stamp duty. Furthermore, the price may differ for independent houses, apartments, and builder floors.
   In some cases, the concerned authority investigates the amenities. For example, a society apartment with additional amenities such as a gym, clubhouse, and parks will have higher stamp charges than one without these features.
    

Also Read: What is RERA Act & Know about its Registration Process?
 

What are the documents required for Stamp Duty?

 
The following are the documents you will need at the time of paying stamp duty. 
 

• Deed of partition
• Deed of mortgage
• Certificates of sale
• Exchange deed
• Transfer instruments
• Gift deed
• Tenancy agreement
• License agreement
• Power of attorneys
• Lease deeds
• Encumbrance certificate
• Builder-buyer agreement

 

How to pay stamp duty?

You can pay stamp duty using any of the following methods.
 

• Non-judicial stamp paper

  Non-judicial is an offline method that requires you and the other party to sign the deal on paper. Following that, it must be registered with the sub-registrar. If the stamp value is less than Rs 50,000, you must purchase the stamp paper from a licenced stamp vendor. If the value is higher, the stamp paper must be purchased from the treasury or sub-treasury of the respective state government.

 

• Franking Method

  Plain paper is used to print the agreement in this method. The agreement is then submitted to the financial institution, which processes it using a franking machine. At this stage, the authorised financial institution also stamps and affixes the denomination, which serves as proof of payment.
   

• E-stamping

  You can pay the stamping fees online by going to the Stock Holding Corporation of India Limited's official website (SHCIL).
   

Also Read: Understanding Loan against Property Interest Rates and Charges
 

Final Words

Stamp duty is a mandatory charge, and failure to pay it may result in an interest penalty of 8-20%. Non-payment of these fees has also resulted in imprisonment by various state governments. If you want to avoid this fee, you can buy property in the name of a woman or buy property on the outskirts of the city.