Stamp Duty: What are its Rates & Charges on Property?

Stamp duty refers to the tax applied on any kind of transactions of money which takes place while completing a home purchase. A physical stamp had to be attached with the document to denote that stamp duty had been paid before the legal activation of the document. This tax levied by the government applies to transactions including sales deeds, conveyance deeds, power of attorney papers, etc and all the above documents can be claimed once the stamp duty is paid. Although the exact amount of duty on each of the above-mentioned document varies, yet a basic rate is fixed by the government and is calculated by evaluating the value on each document and compared with the circle rate and is calculated on the basis of the value that is higher.

Stamp duty is payable before the transaction process is to be executed and can also be paid on the next working day. Since the stamp duty on property transactions is set by the state governments, the rate varies from state to state. In general, the rate varies from 5% – 8%. Additionally, another 1% has to be paid as the registration charge on the stamp duty which might vary from state to state. In case of purchase of a house property then one can claim for an income tax deduction on the stamp duty paid with any other expenses related to the transfer of property.

In the absence of an agreement to the contrary, the purchaser of the property has to pay the stamp duty. However, in case of an exchange of property, both the parties have to pay the stamp duty equally. In general, there are three ways of paying stamp duty: making payments through non-judicial stamp papers, e-stamping or franking. The most traditional method among them is the payment through non-judicial stamp papers where an individual is required to buy a stamp paper from an authorized vendor, write down the terms and conditions of the agreement on the paper and then the paper needs to be signed by both the parties taking part in the transaction.

E-Stamping is a more convenient method of paying stamp duty. With modernization, everything around is becoming digital and hence becoming easier and convenient. Using the method of E-Stamping, one can pay all the stamp duties online. The benefits of e-stamping are that the E-Stamp Certificates are generated within minutes with great ease. These certificates are tamper proof and their authenticity can be checked easily online through the inquiry module. The authenticity and security of E-Stamp Certificate are further increased by a notch as each certificate has a Unique Identification Number and this can help to check the authenticity of the certificate.

Franking, on the other hand, refers to the payment of stamp duty through an authorized bank or franking center. In this case, the documents need to be prepared beforehand and then taken to an authorized bank or center which accepts the stamp duty payments and then physically stamp the paper to make it legal. Franking is a safer method yet it is time consuming where the person needs to physically take all the documents to the centers. There are some taxes benefits that are related to stamp duty that is added by each government individually. In case an individual has purchased a house property in the current financial year, then they can claim for an income tax deduction based on the stamp duty paid along with any other charges paid related to this transaction. However, the maximum tax rate deduction has been fixed by each individual government based on the stamp duties paid.