Buying a new home can be an expensive proposition. In addition to the property price, there are a host of other expenses that need to be taken care of. Stamp duty and registration are some of the additional costs that need to be factored in. This payment is usually made while registering the property in question. Home loan providers like banks and finance houses will let you add the additional cost of stamp duty, but the real question is how much are you expected to pay? Using a stamp duty calculator will give you an accurate estimate of how much you will be expected to pay. This way, you will be ready with the right amount of funds when the time comes for home registration.
To help you get initiated with this topic, let us first look at what stamp duty is.
What is Stamp Duty?
Stamp duty is one of the biggest single expenses you will face when you’re purchasing a property. The amount you pay will vary depending on your specific circumstances. It is a state government tax, which applies when you purchase a property or a piece of land. Stamp duty applies to people purchasing property over a certain price in some states in India.
What is a Stamp Duty Calculator?
The use of stamp duty calculator is primarily done to understand the additional expenses one will incur while registering the ownership of their new house. Furthermore, the stamp duty should be accurately assessed, so that you can apply for an adequate home loan that would cover these additional expenses.
How is Stamp Duty Calculated?
The amount you pay depends on the purpose of the property, the value of the property, and the type of buyer. For example, a first-time buyer will pay a different amount of stamp duty when compared to a landlord.
These are other factors that will determine how stamp duty is calculated on your property.
- Market value of the property – The cost of buying the property with proof.
- Type of property – Duplex, society, independent builder floors etc.
- What the property is used for – Residential, commercial, or agriculture use.
- Property location – The area where the property is located.
- Type of property owner – First-time buyer, age of the owner etc.
Depending on these factors, most buyers can expect to pay anywhere between 5-7% of their total property’s market value as stamp duty.
Top Tip: Considering that stamp duty and new property registration can be an expensive affair, it’s best to requisition these additional charges as part of the overall home loan amount. This will ensure that you won’t have to worry about being able to afford these additional charges later.
Common Misconceptions About Stamp Duty
There are a few misconceptions surrounding stamp duty. If you are a first-time homebuyer, do keep these points in mind.
- Stamp duty is paid only by the buyer of the property and not the seller.
- Stamp duty is never paid when you sell the property. However, you may have to pay capital gains tax.
- Stamp duty isn’t tax-deductible.
- You don’t pay GST on stamp duty; essentially stamp duty has its own rate calculations.
- Stamp duty exemptions areas don’t exist. Although, different state governments levy different rates.
When And How Do You Pay Stamp Duty?
You pay stamp duty when you buy land or a piece of property. You generally have 30 days from the day you purchase the property. To pay for stamp duty, you can either pay online or offline.
- Stamp Paper:
The most common way of paying stamp duty is by buying stamp papers. The stamp paper can be purchased from stationery shops and authorized sellers. On the stamp paper, you must mention details of the house registration, the full address, and the buyer’s details. If, for whatever reason you find this method inconvenient, you can move to the next method of paying stamp duty.
E-stamping is perhaps the easiest and most convenient way to pay for stamp duty. This method allows you to pay stamp duty online by visiting the SHCIL website. Once here, simply choose the state where your property is located, enter relevant details about the property (area, property ownership etc.), and submit the details along with the necessary funds. Once your stamp duty is received, you will receive a UIN (Unique Identification Number) confirming the registration of your property.
Franking is a relatively older method of paying your stamp duty. It requires visiting a franking agent, who will provide you with the necessary stamp(s). This method requires an additional charge by the agent or bank that provides this service.
Before you begin your search for a new house, remember to calculate the additional costs like stamp duty. A stamp duty calculator can help you obtain the right amount which you have to pay eventually. You can find the stamp duty calculators online, which you can use to understand exactly how much you are expected to pay.