Stamp duty is one amongst the different types of charges which home buyers pay while paying for a new home. Many people tend to buy homes with the help of home loans. Though a home loan helps one borrow an amount for the purchase of a home, it does not include the stamp duty and registration charge. Thereby, home loan borrowers need to pay these expenses additionally. But what is it and why do you pay a stamp duty charge? The answer to all queries regarding stamp duty lies below.
What is a stamp duty charge and why to pay it?
A stamp duty charge is a charge paid by a home loan borrower on the documentation process. The charge is incurred on documents like sale deed, power of attorney, and conveyance deed, among others. The charge is paid to authorize the purchase of a house, by validating the registration of the property on the buyer’s name. This is done by legalizing the ownership document.
The stamp duty charge is paid for the Government records. The Government of India maintains a record of all ownerships. Once a person pays a stamp duty charge, his name is recorded in the ownership list, for the purchase of a particular property. It is evidence or proof that the property is legally registered under the individual’s name. The stamp duty charge thus saves one from future disputes that may occur on the ownership of the house. It is compulsory for a house owner, to pay the stamp duty charge and to get it registered. Failing to do the same can stop one from attaining the legal ownership of the house.
How to calculate the stamp duty charge?
The stamp duty charge varies across the property’s value that needs to be registered. The charge is not charged for the service of registration, but on the registration service itself. Further, the charge is estimated by the state assigned reckoner’s, that accesses the stamp duty based on the market value of the property. The market value of the property is further issued by the government on 1st January every year. One can also calculate their stamp duty charge using various stamp duty calculators, that are available online. These calculators help you plan your expenses to buy property by giving you accurate results in no time. However, certain factors affect the stamp duty charges. These are listed as follows:
Stamp duty charged varies on whether the property is residential or commercial.
- It depends on the age of the house, whether it is old or new.
- The charge also depends on the gender of the property owner.
- It depends on the fact whether the property is based on agricultural or non-agricultural land.
- Stamp duty varies according to the type of the house whether it is an independent house or a multi-storey building.
How to pay a stamp duty charge?
A stamp duty charge can be paid using three methods. These are The Franking method, The e-stamping method, and through Non-judicial stamp papers. In the franking method, the stamp duty agreement is submitted in the bank along with the stamp duty charge. However, this facility can be offered only by the selected banks. The e-stamping method, on the other hand, is a digital platform to pay the stamp duty. For this, the buyer is required to visit the official website of the Stock Holding Corporation of India Limited, or as simply put SHCIL. Last but not least, as per the non-judicial stamp paper method, the details of the property is written on the non-judicial stamp paper. After this, the concerned authorities sign the paper after checking their appropriateness.