Just paying the actual cost for a new house is not the only expense while purchasing your dream home. One has to pay added charges on it, like stamp duty and registration charges. The government levies both the charges.

Also, the charges are paid to the state government, which is why the cost differs in every state. The total charge of registration and stamp duty depends on the type, the age, location, status and usage of the property, and the owner’s gender.

What is Stamp Duty?

A form of direct tax, stamp duty is levied according to Section 3 of the Indian Stamp Act, 1899. It is levied on all documented financial transactions. The financial transactions can include promissory notes, bills of exchange, and letters of credit and property transactions. Stamp duty has to be paid before a transaction happens. However, it can also be paid on the transaction’s next working day.

If someone does not make a payment even then, they will be charged 2% for every month’s delay and will be fined up to 200%. Also, stamp duty evasion is punishable.
For instance, one can’t undervalue their property and pay less stamp duty. The penalty is different in each state. Some penalties maybe 20% of the actual stamp duty, while some may lead to imprisonment.

In the absence of an agreement to the contrary, the purchaser must pay the stamp duty. While in a situation of property exchange, the purchaser and the seller are levied with stamp duty. There are also a few ways via which stamp duty charges can be decreased. The stamp duty tax is less for a female buyer. Also, one can look for a state or location where stamp duty is low.

Ways to pay Stamp Duty:

There are three ways to make stamp duty payment:
  • E-stamping,
  • Franking
  • Non-judicial stamp paper
A circle rate set by a state government is how stamp duty is calculated. It also depends on the kind of property it is - urban or rural, commercial or residential.

What are the registration charges?

After completing the stamp duty charges, the transaction document is then passed over for registration in association with the Sub-Registrar of Assurances. As per the Indian Registration Act of 1908, this process is imperative to ensure legal ownership of the property through correct execution and record of the documents. The registration charges are applied for properties costing over Rs. 30,000. The rate is calculated at 1% of the market or the agreement value.

The process of documents’ registration takes place in great detail. The documents that are needed to be furnished are identification proofs such as driving license, passport, pan card, etc., the deed’s original document with two photocopies, transaction’s details, Khata certificate and taxes receipt.

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DISCLAIMER

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.



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