Understanding Stamp Duty and Registration Charges (Property Registration & Stamp Duty Charges in India)

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One of the most significant financial decisions you will ever make in your life is buying a house. When you are ready with the finances and have chosen an appropriate property, the final step that remains is the possession and registration of the property. Registration is important for the legal ownership of the property. You can get your property registered in your name in the local municipal records, with the seller documenting the property being transferred to you. At the time of registration, you will have to pay stamp duty and registration charges. However, in the entire process of buying a home and ensuring that there are sufficient funds to repay the home loan, people usually overlook the role of stamp duty and registration charges. Therefore, if you plan to purchase a property, you must have a fair idea about the stamp duty and registration fees.

Table of Contents

• Understanding Stamp Duty
• Factors Affecting Stamp Duty Charges
• Ways to Pay Stamp Duty
• Stamp Duty Calculation
• Stamp Duty Charges
• Property Registration Process  in India
• Property Registration Charges
• FAQs

One of the most significant financial decisions you will ever make in your life is buying a house. When you are ready with the finances and have chosen an appropriate property, the final step that remains is the possession and registration of the property. Registration is important for the legal ownership of the property. You can get your property registered in your name in the local municipal records, with the seller documenting the property being transferred to you. At the time of registration, you will have to pay stamp duty and registration charges. However, in the entire process of buying a home and ensuring that there are sufficient funds to repay the home loan, people usually overlook the role of stamp duty and registration charges. Therefore, if you plan to purchase a property, you must have a fair idea about the stamp duty and registration fees.

What is Stamp Duty?

Stamp duty is a form of tax imposed by the Indian government on certain legal documents such as sale deeds, conveyance deeds, gift deeds, and mortgage deeds. These documents are used to establish the liabilities and rights of the contracting parties. Stamp duty and registration fees are used to determine possession and serve as proof in a court of law against the selling or purchasing of a house—any delay in paying stamp duty by the buyer results in a fine.

The stamp duty price varies depending on the circle rates of the region. The value of stamp duty also varies from state to state and is administered by the state government per Section 3 of the Indian Stamp Act of 1899.

Factors Affecting Stamp Duty Charges

The stamp duty that you may have to pay for the completion of the registration process depends on several factors such as:

• Location of the Property – The location of the property determines the stamp duty levied. Some areas are charged higher rates as compared to others
• Age of the property – Stamp duty charges for old properties are low as compared to new properties. This is simply because stamp duty is charged on the property’s value and old properties usually tend to cost less as the new ones, hence offering low stamp duty charges
• Usage of the property – Stamp duty charges also vary depending on whether the property is used for residential or commercial purposes
• Owner of the property – Stamp duty charges also vary depending upon the gender and age of the owner

How to Pay Stamp Duty

Stamp duty can be paid in the below-mentioned ways:

• Stamp Paper – The most common method of paying stamp duty is with the help of stamp paper. Here, an individual must purchase a stamp paper from an authorized vendor and get the terms of agreement printed on the same. Both the buyer and seller are supposed to sign the document, and within the four months of signing the stamp paper, the buyer should get the property registered under his/her name.
• E-stamping – E-stamping is the computer-based process of paying the stamp duty online. The Stock Holding Corporation of India Limited (SHCIL) has been appointed as the Central Record Keeping Agency for all the e-stamping related issues in India. After the user has successfully applied for e-stamping and paid the stamp duty, the user gets the e-stamp certificate with a unique Certificate Number (UIN) that can be downloaded and used for future references.

• Franking – Franking refers to the process of getting the documents stamped. The agreement is printed on plain paper and then taken to the Bank or a franking centre in this process. Here, the documents are verified, and the stamp duty needs to be paid. After successful payment of the stamp duty, the authorities stamp the papers. It is after franking that both the parties (buyer and seller) can sign the documents. Alternatively, you may also consider purchasing printed stamp papers that have already undergone the stamping process.

How is Stamp Duty Calculated

Stamp Duty is calculated based on the agreement value of the property or ready reckoner rate, whichever is higher. For example, if the agreement value of a property is Rs. 70 lakh and the ready reckoner rate of the property is Rs. 55 lakh, stamp duty collection will be based on Rs. 70 lakh.

Apart from this, several other factors are taken into consideration while calculating Stamp duty. Some of them are:

• Property status (if the property is new or old)
• The area where the property is located (urban, suburban, rural, metropolitan)
• Location of the property
• Age of the owner (there may be discounts for senior citizens)
• Gender of the owner (some states may offer stamp duty concession to female owners)
• Usage of the property (if the property is residential or commercial)
• Type of property (independent house or flat)

Stamp Duty Charges in Different Cities

Mentioned below are stamp duty charges for some of the major Indian cities:

City	Stamp Duty Charges
Delhi	Male – 6% of the consideration amount or the circle rate of the property applicable in the area, whichever is higher Female – 4% of the consideration amount or the circle rate of the property applicable in the area, whichever is higher
Bangalore	Male, Female or Joint owners (regardless of gender) – 5% on properties above Rs. 35 lakh 3% on properties between Rs. 21 lakh and 35 lakh 3% on properties priced between Rs. 35 lakh to Rs. 45 lakh 2% on properties less than Rs. 20 lakh
Gurgaon	Male – 5% – 7% Female – 3% – 5% Joint – 4% – 6%
Kolkata	For male and female owners – Stamp duty for property less than Rs. 25 lakh – 6% Stamp duty for the property above Rs. 40 lakh – 7%

Note: The stamp duty charges are subject to change as per the changes in the state government rules. 

Property Registration Process  In India

Computerized property registration systems have made the procedure of registering a property simple. However, in some states, you may still be required to fill an application and submit the same to the SDM or the Sub-Registrar of your area. You can also download the application from the website of the concerned department or get it directly from the concerned authority’s office.

After submission of the application, the following process is followed for property registration:

• Verification of the Property Title: The obligation to verify the property title lies on the buyer before registration. If the property is being bought from another homeowner, he/she will have the documents ready for registration
• Paying Stamp Duty – Stamp papers need to be prepared as per the stamp duty charges that are to be paid by the buyer. You can calculate the stamp duty charges using the stamp duty and registration charges calculator
• Getting the Sale Deed Ready – The step involves preparing the sale deed and getting it typed on the stamp papers. The deed is prepared by an authorised attorney on behalf of the buyer. The subject of the sale deed varies as per the nature of the transaction, such as a sale, lease, power of attorney, mortgage, etc.
• Submission of Documents – Along with the sale deed, you are required to submit the required documents such as No Objection Certificate (if the building is located on the city collector’s land), address proof, ID, passport size photographs, DD or cash for the payment of the stamp duty, etc.

After completing the registration, the sub-registrar will hand over all the original documents while maintaining a copy of the papers with him/her.

Property Registration Charges in Different Cities

Mentioned below are some of the property registration charges:

City	Property Registration Charges
Delhi	1% of the property value
Bangalore	1% of the property value
Gurgaon	1% of the property value
Kolkata	1% of the property value

Note: The property registration charges are subject to change as per the changes in the state government rules. 

FAQs

Is stamp duty calculated on carpet area or built-up area?

Stamp duty and registration charges are based on price per square feet of carpet area only.

What is the difference between registration and stamp duty?

The fee for property registration is payable over and above the stamp duty. The registration fee is applicable in the case of properties that cost over Rs. 30,000. This fee is usually calculated at 1% of the agreement value or the market value, whichever is lower.

Can stamp duty be paid in instalments?

No, stamp duty cannot be paid in instalments; it needs to be paid in full.

Owning our own home is a dream for most of us. However, skyrocketing property prices across the country make buying a residential property difficult, especially early in life. Purchasing a house involves not only finding the right home, but also getting your home loan application approved. And during this entire procedure of ensuring we have enough finances, we often overlook the role played by stamp duty and registration charges, thereby, upsetting our financial planning. These charges often tend to vary from one municipal area to another depending on the applicable local rates. Let’s see what entails stamp duty and registration charges as well as how they work.

What is Stamp Duty?

Stamp duty is a tax levied on any kind of transaction that takes place and is documented. These may include a conveyance deed, sale deed, power of attorney etc. Technically speaking, it is a tax that is paid for acquiring any document or instrument that facilitates the creation, transfer, limiting, extending, extinguishing or recording any right or liability. Stamp duty came into existence after the passing of the Indian Stamp Act in 1899. After the stamp duty is paid, these documents or instruments become legally valid, and have evidentiary value in a court of law.

Calculating Stamp Duty

Stamp duty calculation is based on the value of the property. Each Indian state has its own criteria based on which it is calculated. It is generally paid on the basis of the circle rate that is determined by a state government. Stamp duty also varies on the basis of the kind of property i.e. residential or commercial, as well as for urban and rural areas.

There are three ways in which you can pay stamp duty for the new property you are about to own. You may consider payment through non-judicial stamp paper, e-stamping, or franking, that is you pay the duty through some franking agency or a bank that is authorized to accept such a payment. Franking does involve some extra charges based on the state you are purchasing the property in. The table below shows some of the stamp duty rates that are prevalent in key states across India.

 

Table1. The following table provides stamp duty  information of leading States in India*

	Delhi	Uttar Pradesh	Andhra Pradesh	Tamil Nadu	Madhya Pradesh	Punjab	West Bengal	Assam
Male	6%	8%	3%	6%	0.50%	8%	6%	1%
Female	4%	8%	3%	6%	0.50%	7%	6%	1%
Joint	5%	8%	3%	6%	0.50%	8%	6%	1%
Senior Citizen	6%	8%	3%	6%	0.50%	8%	6%	1%
Company	6%	8%	3%	6%	0.50%	8%	6%	1%

*The rates mentioned above are indicative and subject to periodic change.

The Registration Process

After having completed the payment of stamp duty, the document goes through a process of registration with the help of the Sub-Registrar of Assurances where the property is located. This procedure is defined in detail by the Indian Registration Act of 1908. This is done in order to record the proper execution of the document so that you get legal ownership of the newly acquired property.

The Fees

The fee for property registration is payable over and above the stamp duty. The registration fee is applicable in case of properties that cost over Rs. 30,000. This fee is usually calculated at 1% of the agreement value or the market value, whichever is lower.

The Procedure

Registration of documents involves thorough scrutiny of the documents and is a detailed procedure. The following are some key documents required at the time of registration-

• Identification documents like Pan Card, Passport, Driving License, etc. of both the seller as well as the purchaser
• The original deed document along with two photocopies, which is submitted to the Sub-Registrar of Assurances.
• The proof of payment of the Stamp Duty.
• Payment details of the transaction
• The Khata certificate and receipt of taxes paid

After all of the above procedures and documentation is provided, you will be given a receipt with a unique serial number, which marks the successful completion of the registration process.

To conclude, a property purchase involves substantial investment on the part of the buyer, hence it is important to know the nitty-gritty of the purchase and registration procedure before you decide to complete the purchase. Therefore, doing due-diligence of the property and complying with all legal formalities is of utmost importance when making such a large investment.