Buying a property comes with a variety of costs involved in the transactional process. Most of our focus goes into planning for the actual value of the property, missing out on the registration fee and an additional fee known as Stamp Duty. Overlooking the stamp duty results in inadequate financial planning. The charges are calculated as a percentage of the total value of the property. It tends to vary from 4% to 10% based on the city you reside in, depending on the applicable local charges. The stamp duty in Thane may be different from the stamp duty in Lonavala, so on and so forth.
What is Stamp Duty?
Stamp duty is a tax levied on any kind of property transaction that is documented. The tax is paid to acquire a document or instrument facilitating the creation, transfer, extending or recording of any right or liability. The document thus obtained becomes legally valid after the payment of this tax.
In a city with a stamp duty of 4%, when you purchase a property worth Rs. 50 lakhs, you will have to pay an additional tax of Rs. 2 lakhs (4% of 50 lakhs). Therefore, the stamp duty in Pune may be different from that of any other city.
The stamp duty is meant to be paid at the time of registration of the property, and the stamp paper used needs to bear the name of either of the parties involved in the agreement.
Stamp Duty Calculation
The stamp duty is determined based on the property value and other criteria specific to each Indian state. Its payment in a particular state depends on the circle rate determined by its state government. The stamp duty also varies on the type of property, whether it is a residential or commercial property and whether it is in urban or rural areas.
Mode of Stamp Duty Payment
As you purchase a property, you can make the stamp duty payment in three different ways. You can opt for non-judicial stamp paper or e-stamping or franking to complete the transaction. The non-judicial stamp paper is the payment using the physical stamp paper while e-stamping is payment through a computer-based application. In franking, you have to pay the stamp duty through a franking agency or an authorised bank. Unlike the other two options, franking involves extra charges based on the state you are purchasing the property in.
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