Stamp Duty Charges

Stamp Duty Charges
What is a stamp duty charge?

While transferring the property ownership, the state government imposes stamp taxes on the assets or properties, which must be paid compulsorily under Section 3, the Indian Stamp Act of 1899. The home buyer pays the stamp duty charges for the property registration; however, first-time property buyers are exempted from this tax.

Why is stamp duty charged?

In ancient times, the government used to generate revenue through stamp duties, export & import duties and property taxes and later used that at the times of war, but over time, the tax’s volume has been increased.

At this time, Stamp duty charges have become a regular source of income of the state government, and through these funds, they can regulate their activities effortlessly. Also, the stamp duty charges fluctuate state to state, but it usually ranges from 3% to 8% of the property value.

The stamp tax or stamp duty charge is not uniform for the individual belonging to or residing in the same state. It depends upon varied factors, and the elements are:

1. Purpose of transaction
The purpose of the property transaction also determines its stamp duty charges. For example, commercial buildings are charged a high stamp tax compared to residential buildings because the commercial buildings demand additional services like ample parking, security, etc.

2. Owner’s age
The owner’s age plays a crucial role in determining the stamp duty charge. The majority of the state governments have finances some percentage of the stamp duty charge if the buyer is a senior citizen.

3. Owner’s gender
Like the senior age group, our country’s women also receive a discount on stamp duty. The men’s population pays around 2% additional tax for the same property.

4. Property’s location
Suppose the property location comes under a municipal locality or is in a posh area. In that case, you will be paying more than the one found in the panchayat area or town’s outskirts to get it stamped.

5. Facilities
For every additional facility like play area, swimming pool, library, gym etc., you pay surplus money to get it stamped.

6. Property’s age
In determining the stamp duty charges, the property’s market value plays an important role, and both have an inverse relationship with each other. For example, if the property is sold, it will attract fewer buyers, & hence, the stamp duty charges will be less.

Once you’re familiar with the factors determining the stamp duty charge, it’s time to know the documentation.

Documents required for paying stamp duty charges:

• Tax receipts for the last three months
• Power of attorney (if there is any)
• Registered development certificate (In case of joint property)
• Khata certificate to identify property’s ownership
• Deed of sell
• A copy of recorded previous documents (if the property is a re-sell)
• Bank statements (in case there is a loan on the property)
• Agreement of sale
• Electricity bill
• Landowner documents
• Sanctioned building plan (in case you’re buying an apartment in a building)
• Electricity bill
• NOC (if buying an apartment)

Now, it’s the time to pay for the stamp duty charges & usually it is accomplished in three steps & those are:

1. Digital stamping
The Stock Holding Corporation of India Limited (SHCIL) is appointed as an authorized e-stamping body, and in some cases, e-stamping is mandatory to smooth the stamping process. For accessing the e-stamping facility, you have to visit the SHCIL website and check whether you’re eligible or not.

If yes, fill up the application form & send it to the appropriate office along with the stamp money. If you’re unsure about the money, then you can pay the stamp duty charge via debit, credit, DD, cheque, net-baking or UPI.

Once you pay the money, you will receive an e-stamp certificate & it comes with a Unique Certificate Number (UIN) and an issue date which is strictly not to be shared with anybody.

2. Franking
For this, you will need an authorized franking agent, and usually, the bank acts as the one. Before signing the documents, the franking agent will stamp your document indicating that the stamp duty amount is paid. Later, a machine will confirm by putting an adhesive stamp on the legal documents. The franking prices vary state to state & it’s usually the minimal cost, and if you want, you can negotiate with the franking agent depending upon its relationship with you.

3. Physical stamp paper
Buying a physical stamp paper for paying stamp duty charges is one of the most common methods. However, this method is highly inconvenient because hunting for an authorized vendor is not easy, plus you will need multiple stamp papers if the amount is significant.

Will I get the property’s ownership after paying stamp duty charges?

No, after paying stamp duty charges, the property documents are to be registered & once the registration process is finished, you become the legal owner of the property.

What if I pay an inadequate stamp duty charge?

This is legally not possible; however, you can always negotiate with the agent, but it depends on agreeing or disagreeing.

In addition, if you get caught, you have to pay the penalty and can be imprisoned, so it is not advisable to do so.