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What are the Different Types of Stamp Duty in India?

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Buying a home involves a number of costs. The cost of the property is just one part. There are other charges to consider as well. Among these are stamp duty and registration charges. You bear these charges when carrying out transactions related to the property. These include sale, lease, and renting out of the property. First-time homebuyers are often unfamiliar with these charges. Thus, facing stamp duty and registration charges often brings financial stress in their life. But a stamp duty calculator can help you to manage your funds in a better way. Things become easy once you learn what these charges entail.

What is Stamp Duty?

Stamp duty is a tax levied by the government with respect to your property documents. These include conveyance deed, sale deed, and power of attorney. The tax comes into play when you buy, sell, or transfer a house. A document on which stamp duty has been paid is considered to be a valid legal document. Such a document can be produced in court and it has evidentiary value. So, you will be liable to pay stamp duty when acquiring a new home. Stamp duty will also apply when you sell or transfer the property in someone else’s name.

Types of Stamp

Generally, there are two types of stamps used for official purposes in India:

  • Impressed stamp
  • Adhesive stamp

An impressed stamp duty is produced by impressing a stamp on a document. Like any other stamp, it shows that the required tax has been paid for the document. There are several ways of creating an impressed stamp. One example might be labels affixed and impressed by the authorised official. Franking machines in banks can also create an impressed stamp. This is used when someone deposits the necessary amount of stamp duty to the bank.

As the name suggests, an adhesive stamp has glue on its back, which makes it easy to stick. Adhesive stamps are more convenient than impressed stamps. It becomes easy to fix the labels on the various documents. Adhesive stamps can be divided into two parts:

  • Postal stamps
  • Non-postal stamps

The use of postal stamps is limited to transactions related to the post office. However, a non-postal adhesive stamp has no such restriction. Thus, the usage is limited. Some examples are court fee stamp, revenue stamp, notarial stamp, special adhesive stamp, foreign bill stamp, and brokers’ note.

How is Stamp Duty Calculated?

The amount of stamp duty you need to pay will depend on two things:

  • The location of the property
  • The valuation of the property

The state government does the calculation and decides the applicable fee depending on the circle rate of the property. This rate tends to vary from state to state. Besides, the charges differ based on the nature of the property. For example, the stamp duty for a residential property is different from that of a commercial property. Whether the property is in a rural or an urban area will also have an impact on the stamp duty fee.

Use a stamp duty calculator to assess the overall costs of the transaction. Factor this in when seeking a home loan. If you are eligible, you could get a large loan. Non-banking financial companies (NBFCs) offer home loans of up to Rs.5 crore.

You can pay the stamp duty for your new home in a number of ways. The payment options include the use of non-judicial stamp paper and e-stamping. You could also pay through an authorised franking agency or a bank.

Summing Up

These days, getting a home loan is easy. And if you are aware of all the different charges it becomes even easier. You can approach several banks and NBFCs for attractive deals.

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