What is Stamp Duty?

Stamp duty is an indirect tax levied by the government on transactions involving the change of ownership of certain instruments. Upon making the payment of the stamp duty, you have to record the deal’s details on a stamp paper, which validates the transaction and makes it legal.

If you are purchasing a house and planning to take a home loan you would have come across the term. The state government levies stamp duty in case of property deals, and each state of India varies definitively in its rules for stamp duty.

However, in all states, you have to pay the stamp duty whenever you buy or sell a property; this rule is irrespective of:

  • the number of buyers and sellers
  • the kind of the property
  • the nature of the agreement

A stamp paper is a document of evidentiary value, meaning during any court or legal complications in the future, you can use this document as your legal evidence.

Once you pay the stamp duty, the transaction is valid. That is why you should pay the stamp duty without any delay. Ideally, you should pay the stamp duty while validating the transaction. However, if you cannot pay it at that point, do not miss the deadline for stamp duty authentication.

Stamp Duty Calculator

Stamp duty usually comes down to 4-10% of the total cost of the property. In addition to the stamp duty, there is a charge of 1% for carrying out the registration.

Now, depending upon the deal’s total cost, these tiny sub-charges may come down to a substantial amount. So, if you are planning to buy a house, it is wise to factor in these charges and apply for a home loan accordingly.

Not paying the stamp duty will dispute the property and lead to the instrument getting impounded. Doing so would also lead to a penalty of 2% of the pending amount to be paid. This penalty is payable monthly up to a maximum limit of 200%.

Although stamp duty rates are a state-government policy, they have to be according to Section 3 of the Indian Stamp Act, 1899. As per this provision, the person executing the instrument must first paste the authorized stamp and permanently attach it to the document.

Then, they must attest the document so that their signature cancels the stamp and record both. This process ensures that no one can use the stamp again and also affirms the document. Failing to do so as instructed would mean that the document is not stamped and legal. Make sure that the signature leaves the stamp visible and there are no over-writings involved.

Stamp Duty Cost


Stamp Duty Rates

Although we have established that stamp duty rates vary from one state to another, various factors can also influence the cost:

  • How Old is the property?
  • How expensive is the property?
  • How many floors are there?
  • What type of property is it? Is it a farmhouse or a flat?
  • Where is the property?
  • How are you going to use the property: Residential or Commercial?
  • Who is the property owner (their gender and age)?

Moreover, there are various forms of property transactions, which include deeds of partition, mortgage, lease, to name a few. The amount of stamp duty and the payee responsible would also depend on the form of the property transaction.

If you would like to quickly get an idea of how much stamp duty will be payable on your purchase, you can click here and try our online stamp duty calculator.

The property stamp duty calculator gives you a quick idea of how much you would be paying.