How to Claim Stamp Duty Exemption on Your Property?

It is common for Indian people to know about the Income Tax benefits they can claim. However, while Section 80C is the most famous section of the Income Tax Act, yet only a few people know about the exemption of stamp duty and the registration fees paid for purchasing a property. Let's take a closer look at all these rules.

According to Section 80C(viii)(d), you can claim tax benefits of up to Rs 1.50 lakhs on your stamp duty and registration charges for a residential property. Although, stamp duty exemption is allowed only to individuals and HUFs (Hindu Undivided Family). Additional conditions:

• Your ITR for the year of deduction will be revised
• Tax on the deduction claimed earlier becomes payable.

• Tax Benefit in the Same Financial Year In order to claim exemption of these expenses, it is important to ensure that you have paid the same during the current year. You cannot claim tax benefits for expenses that you haven't paid yet.For example, let's say you purchase a property and pay the stamp duty and registration fees on 10/09/2021. The deduction for these expenses is available only for FY 2021-22.
• Double Tax Benefit for Joint Property In case you purchase a residential property jointly with your spouse, both of you can claim a deduction of Rs. 1.50 Lakhs each. So, joint owners can claim double tax benefits.
• Benefit Only on Possession For an under-construction property, you can claim the stamp duty exemption only when it comes into your possession. However, you must be the title owner of the property to claim this tax benefit.
• Only on Fresh Residencial Property Tax benefits of stamp duty and registration fees are not available if you purchase a residential property that is resold. This means fresh occupancy is necessary to claim the tax benefits. On the other hand, tax benefits are not allowed for the purchase of a commercial property or a plot of land.
• 5-year Lock-In There is a lock-in period for the investments admissible under Section 80C. Similarly, to claim the tax benefits for your property, you cannot sell it before the completion of 5 years. If you sell your property within this time,

Stamp Duty can be paid in the following ways:

• E-Stamping
• Franking
• Non-Judicial Stamp

Stamp duty exemption is allowed only for the payment of stamp duty, registration charges and all other expenses incidental to the transfer of property. So, here is a list of expenses that you cannot claim under Section 80C.

• Addition or alteration
• Renovation or repair

• Any kind of admission fee
• Initial deposit made by the shareholder of a company
• Initial deposit made by the member of a co-operative society
• Any of the following costs incurred for

to an existing property, for which the completion certificate has been issued, or the property is occupied by you or your tenant.

There are 5 types of properties based on their uses:

1. Residential Property
2. Commercial Property
3. Agricultural Property
4. Recreational Property
5. Transport Property

These properties can be owned either singly, jointly or by nomination. But the tax benefits are available only for the individuals and HUFs that purchase residential property. Hence, companies and other institutions cannot claim stamp duty exemption for the purchase of residential complexes for their staff.

The maximum benefits under Section 80C in a financial year cannot exceed Rs. 1.50 lakhs. Investments in PPF accounts, tax-saving FDs and LIC premium are also included in this section alongside the tax benefits for stamp duty. Hence, you are allowed to deduct only Rs. 1.50 lakhs from your taxable income, irrespective of your actual investment.

Just for the sake of simple understanding, the tax benefit on stamp duty is called stamp duty exemption . But technically, it is a deduction from your total taxable income. The word exemption is used for an income that is not taxable as per the Income Tax Act. Whereas the expenses incurred are allowed as a deduction from your taxable income.

Gaining proper knowledge about the deductions in advance can help you plan your tax efficiently. Remember, India has introduced a New Tax Regime from FY 2020-21, giving you two options. You can either choose the old regime or the new regime. All the deductions are available only under the old tax regime and not the new one. So, choose wisely.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.