A reduction of 3% in stamp duty, as proposed in Karnataka, means a benefit of ₹60,000 for someone buying an apartment for ₹20 lakh
Stamp duty is not uniform across states and varies for different type of documents
On 6 March 2020, deputy chief minister and finance minister of Maharashtra Ajit Pawar proposed a concession in stamp duty rate for property registration, while presenting the state budget for financial year 2020-21. “It is necessary to promote the state’s real estate sector in the wake of slowdown. Hence, I propose to give 1% concession, for the next two years, in the stamp duty and other related charges applicable on registration of documents," Pawar said.
The concessional rate will be applicable to properties within the area under the Mumbai Metropolitan Region Development Authority, and in the areas under the municipal corporations of Pune, Pimpri Chinchwad and Nagpur.
In order to promote affordable housing, the Karnataka government has also proposed the reduction in stamp duty from 5% to 2% on the first time registration of new apartments or flats priced lower than ₹20 lakh, in the next fiscal year. We tell you all you need to know about paying stamp duty.
Stamp duty is a state levy paid to register a document, typically an agreement or transaction paper between two or more parties, with the registrar.
Usually, it is a fixed amount based on the nature of document, or is charged at a certain percentage of the agreement value stated in the document.
Stamp duty is not uniform across states and varies for different type of documents. For instance, in the case of property registration, stamp duty is charged on the transaction value or circle rate (minimum price of property, as per the government), whichever is higher. The amount may also vary based on the owner’s gender. For instance, in New Delhi, a woman has to pay 4% stamp duty, while a man pays 6%. Similarly, 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.
Reduction in stamp duty rate can bring down the transaction cost significantly. For instance, a reduction of 3% in stamp duty, as proposed in Karnataka, means a benefit of ₹60,000 for someone buying an apartment for ₹20 lakh .
Given that a house is a basic necessity, the government provides some sops on the payment of stamp duty to homebuyers. Stamp duty and registration fee paid when registering a property qualify as deductibles under section 80C of the Income-tax Act, 1961.
If you buy a house jointly with your spouse or any other family member, all buyers will be allowed to claim the stamp duty proportionately, in accordance with their share in property. However, there are certain conditions need to be fulfilled in order to claim this deduction. For instance, a buyer can claim deduction only if the construction of the property is complete and they have legal possession of it.
Keep in mind that the claim for deduction needs to be made while filing the income tax return for the year in which the stamp duty and registration fee are paid.