Does a Home Loan cover stamp duty and registration charges?
With property prices on the rise, look for a sufficient home loan sanction that covers most of your home buying expenses. However, keep in mind that stamp duty and registration charges are normally excluded from your home loan sanction. So, factor in these charges as an out-of-pocket expense and save up accordingly.
The process of home buying involves various costs apart from paying for the home itself. While paying for a parking space or a maintenance fee is one kind of charge, the other is the mandatory stamp duty and registration charges that you must pay to complete your home purchase formalities.
Stamp duty and registration charges can go up to 7-10% of the property value and differ from state to state. These charges change as per the government’s discretion and currently, a few states offer a stamp duty concession to women homebuyers.
Take a look at these charges in a little more detail.
What is stamp duty and how is it calculated?
Stamp duty is the tax that is levied on any kind of monetary transaction that takes place while completing your home purchase and came into being after the passing of the Indian Stamp Act in 1899. This includes the tax on transactions such as conveyance deeds, sale deeds, and power of attorney papers. Once you pay the stamp duty, you can claim these documents. The exact amount for the duty on each document is calculated by evaluating the value and nature of your property. Then it is compared with the circle rate. The amount is then calculated on the value that is higher.
What is the registration fee on your property?
Registration fee is a cost that you pay over and above the stamp duty to get the property registered in your name. The fee is usually calculated at 1% of the total cost of the property or its market value, depending on where you buy the property. In Mumbai, for example, it is 1% of the total market or agreement value of the property or Rs. 30,000, whichever is lesser. In Kolkata, it is 1% of the total cost of the property. If you purchase a home of Rs. 70 lakh, for example, the registration fee for the home would be 1% of that amount, which is Rs. 70,000.
How to take care of the stamp duty and registration process?
The registration process was brought to action with the Indian Registration Act of 1908. You can simply follow these steps to register your house with the sub-registrar of the area where your property is located.
- Estimate the value of your property and calculate the stamp duty.
- Buy non-judicial stamp papers of the requisite amount. You can even buy e-stamp papers online.
- Prepare the sale dead by hiring an authorised attorney, who will act on behalf of you, the buyer.
- Pay the stamp duty and registration charges.
- Register the deed at the sub-registrar’s office with signatures from two witnesses
- Submit the necessary documents, such as identity proof, address proof and No Objection Certificate (NOC).
- Once the document is verified, the registration process is complete. You will get the original set of documents while the sub-registrar’s office will hold on to a copy for their records.
Now that you know about stamp duty and registration charges and how to register your property, don’t forget to budget for this amount when you are planning to purchase a home. Use our stamp duty calculator to know the stamp duty and property registration charges in all states of India.
