What Is the Difference Between Stamp Duty and Registration Fee?

Purchasing a home is one of the most crucial financial decisions you will ever make in your life. When you are financially prepared and have picked an appropriate property, the final step is to take possession and register the property. Registration is required for legal ownership of property. You can get your property registered in your name in the local municipal records, with the seller verifying the transfer of ownership. Stamp duty and registration fees must be paid at the time of registration. However, in the process of purchasing a property and ensuring that sufficient money is available to repay the home loan, consumers frequently ignore the role of stamp duty and registration fees.

As a result, if you intend to buy a home, you should be aware of the stamp duty and registration fees.

What exactly is Stamp Duty?

The Indian government imposes stamp duty on some legal papers such as sale deeds, conveyance deeds, gift deeds, and mortgage deeds. These agreements are intended to establish the contracting parties’ liabilities and rights. Stamp duty and registration fees are used to determine possession and serve as evidence in court against the sale or purchase of a house—any delay in paying stamp duty by the buyer results in a fine.

The stamp duty price varies according to the region’s circle rates. The value of stamp duty varies by state and is administered by the state government per Section 3 of the Indian Stamp Act of 1899.

Factors Influencing Stamp Duty Rates

The stamp duty that you may be required to pay for the completion of the registration process is determined by numerous criteria, including

1. Property Location – The stamp duty levied is determined by the property’s location. Some places are charged higher rates than others.
2. Property age – Stamp duty charges for older properties are lower than for newer properties. This is because stamp duty is based on the property’s worth, and older properties typically cost less than newer ones, resulting in lower stamp duty rates.
3. Property uses- Stamp duty charges differ depending on whether the property is used for residential or commercial reasons.
4. Owner of the property – Stamp duty charges vary depending on the owner’s gender and age.

Stamp Duty Payment

Stamp duty can be paid in the following ways:

Stamp Paper – Stamp paper is the most commonly used way of paying stamp duty. An individual must buy stamp paper from an approved vendor and have the details of the agreement written on it. Both the buyer and seller must sign the document, and the buyer must register the property in his or her name within four months of signing the stamp paper.

E-stamping- E-stamping is the computer-assisted method of paying stamp duty online. The Stock Holding Corporation of India Limited (SHCIL) has been designated as the Central Record Keeping Agency in India for all e-stamping issues. After successfully applying for e-stamping and paying the stamp tax, the user receives an e-stamp certificate with a unique Certificate Number (UIN) that can be downloaded and used in the future.

How is Stamp Duty Determined?

Stamp duty is determined based on the property’s agreed value or the ready reckoner rate, whichever is greater. For example, if a property’s agreement value is Rs. 70 lakh and its ready reckoner rate is Rs. 55 lakh, stamp duty collection will be based on Rs. 70 lakh.

Aside from this, several other considerations are considered when computing stamp duty. Among them are:

1. Property age (whether the property is new or old)
2. The location of the property (urban, suburban, rural, or metropolitan)
3. The address of the property
4. Age of the owner (senior citizens may be eligible for discounts)
5. Gender of the owner (certain states may provide female owners a stamp duty exemption)
6. Use of the property (whether residential or commercial)
7. Property type (independent house or flat)

Different Cities’ Stamp Duty Charges

Stamp duty costs for several of India’s main cities are listed below:

India’s Property Registration Procedure

The use of computerized property registration systems has simplified the process of registering a property. However, in some jurisdictions, you may still be required to fill out an application and submit it to your area’s SDM or Sub-Registrar. You can also obtain the application on the applicable department’s website or directly from the office of the competent authority.

Following the submission of the application, the following steps are taken for property registration:

1. Property Title Verification: The buyer is responsible for verifying the property title before registration. If the property is purchased from another homeowner, the documentation will be available for registration.
2. Stamp Duty – Stamp papers must be created by the stamp duty charges that the buyer must pay. The stamp duty and registration charges calculator can be used to determine the stamp duty charges.
3. Preparing the Sale document – This process entails preparing the sale document and having it typed on the stamp sheets. An authorized attorney prepares the deed on behalf of the buyer. The subject of the sale deed varies depending on the type of transaction, such as a sale, lease, power of attorney, mortgage, and so on.
4. Document Submission – In addition to the sale deed, you must submit the following documents: No Objection Certificate (if the building is located on city collector’s land), address proof, ID, passport size pictures, DD or cash for stamp duty payment, and so on.

After completing the registration, the sub-registrar will hand over all original documents while keeping a copy on file.

Different Cities’ Property Registration Fees

Some of the property registration fees are listed below:

Property Registration Fees in the City

• Delhi- 1% of the home’s value
• Bangalore- 1% of the home’s value
• Gurgaon- 1% of the home’s value
• Kolkata- 1% of the home’s value
• Karnal- 1% of the home’s value

To summarize, a property acquisition requires a significant expenditure on the side of the buyer, thus it is critical to understand the intricacies of the purchase and registration process before proceeding with the purchase. When making such a substantial investment, completing due diligence on the property and following all legal requirements is critical.