Does a Home Loan Cover Stamp Duty and Registration Charges?
The process of home buying consists of various additional costs apart from the paying for the home itself. While paying for a parking space or a maintenance fee is one kind of charge, the other is mandatory stamp duty and registration charges that you have to pay to complete your home purchase formalities. And with property prices on the rise, you are sure to look for a good Home Loan sanction that covers maximum home buying expenses. However, 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
Recently, the National Housing Bank (NHB) highlighted how stamp duty and registration fees should be reduced to 5–6% of the cost of the property as compared to the ongoing rate which goes up to 12% in some states. Currently, the percentage varies from one region to another, and is decided as per the government’s discretion. So, if state governments agree to NHB’s request, then these charges will be brought down in the time to come, making home purchase more affordable for you.
In the meanwhile, 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 tax on transactions such as conveyance deeds, sale deed, 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?
The registration fee is a cost that you have to 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 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. Hence, if you purchase a home Rs.70 lakh, for example the registration fee for the home would be 1% of that amount, which is Rs.70,000.
How do You 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 of the same 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.