DYK: Stamp duty paid to register residential property qualifies for tax deduction

Stamp duty and registration fee qualify as deductibles under Section 80C of the Income-Tax Act ,1961, up to a limit of RS1.5 lakh


Pradeep Gaur/Mint
Pradeep Gaur/Mint

You can avail various income tax deductions, allowed under various sections, to save on taxes. Apart from investments, some expenses too qualify for these deductions. One such deductible is payment of stamp duty and registration fee while registering a residential property.

Stamp duty and the registration fee?

Stamp duty is a state levy paid to register a document, whereas a registration fee could be considered a processing fee. Typically, these are a percentage of the property’s value, and their rates vary across states. Stamp duty and registration fee are charged on the transaction value or circle rate (minimum price of property, for assessment purposes), whichever is higher. Stamp duty may also vary depending on the owner’s sex. For instance, in Delhi women pay 4% stamp duty compared to 6% for men. Registration fee is the same for both in Delhi, i.e., 1% of the property’s value. However, in case of joint ownership, where the property is bought jointly in the name of a man and a woman, stamp duty is 5% in Delhi.

In some states, the stamp duty depends on the region in which the sale deed is executed. For instance, in Haryana, a man is required to pay 8% stamp duty in urban areas and 6% in rural areas, while a woman has to pay 6% and 4%, respectively.

Tax benefit

Stamp duty and registration fee qualify as deductibles under section 80C of the Income-tax Act, 1961, up to a limit of Rs1.5 lakh.

Do remember, however, that you can claim this deduction only if the construction of the property has been complete and you have legal possession of the house.

Also, make sure that you purchase the stamp papers in your name, and not in somebody else’s name.

Make the claim for deduction while filing your income tax return of the relevant year, i.e., the year in which the stamp duty and registration fee are paid.

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