Factors That Determine Stamp Duty for a Property | Kotak Mahindra Bank - Home Loan Stories

16 JUNE, 2022

When you are looking at buying a house, it’s essential that you consider all the costs that go into this purchase and not simply the cost of the property. There are several additional costs you need to consider, costs that are unavoidable. One such cost includes stamp duty and registration charges. It’s a type of tax that is levied by the state government on the transfer of property at the time of purchase. Registration charges tend to be 1% of the value of the property in most states in India. But when it comes to stamp duty, the range widely differs and so do the factors that impact it. Here are the primary factors that affect the stamp duty calculation of a property:

  • Gender of the buyer

Some states in the country offer a concession on the stamp duty rate for female homebuyers. These states include Bihar, Haryana, Punjab, and Maharashtra, among others. It’s important to note that this concession may come with certain conditions depending on the state in which you are buying the property. For instance, in Maharashtra, the female buyer cannot sell the property to a male buyer for 15 years from the date of purchase.

  • Location of the property

Other than the state in which the property is, what part is it located in also determines stamp duty – whether it is in a city, suburb, metropolitan, or rural area. Some states, such as Haryana, charge higher stamp duty for properties in urban areas than for those in rural areas.

  • Value of the property

While the amount of stamp duty does at the end depend on the value of the property, in some states in India, the percentage of stamp duty also depends on it. For instance, in West Bengal, for properties up to Rs 1 crore, the stamp duty rate is 6% while for properties above Rs 1 crore it is 7%.

  • Type and purpose of the property

There are several types of properties – independent house, apartment, etc., in India and the type of property you are buying also determines the stamp duty. Another thing that goes into stamp duty calculation is the purpose of the property. Usually, stamp duty on commercial properties is higher than on residential properties.

  • Other factors

Since stamp duty is charged by the state government, there can be state-specific factors that affect stamp duty calculation. For example, in Sikkim, the stamp duty rate differs depending on the origin of the buyer. A buyer of Sikkimese origin needs to pay a stamp duty of 5% while buyers of non-Sikkimese origin are charged a stamp duty of 10%.

Calculate stamp duty yourself

You can use an online stamp duty calculator and estimate the amount of stamp duty yourself. This is essential because stamp duty and registration charges are overhead charges and are not included in the value of the home loan. Hence, you need to arrange money for these costs yourself and must know in advance what your stamp duty obligation is.

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Disclaimer: This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank make no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.