Most home loan borrowers in India take into account only the cost of the property while deciding the loan amount to be borrowed. They completely forget to take into account stamp duty and registration charges, even when these charges combined make up a significant amount. Before we talk about stamp duty calculator essentials, let us understand what is stamp duty and registration charges and why must one pay these charges when buying a property.
What are Stamp Duty and Registration Charges?
Under Section 3 of the Indian Stamp Act, of 1899, one must pay stamp duty, which is a type of tax that one must pay the state government when buying or selling a property. When a transaction related to real estate happens, a documented sale agreement is created and this agreement must be stamped for the transaction to be considered complete.
The stamp duty is calculated after taking into account several factors, you can use a stamp duty calculator for the same, including the value of the property as well as the location of the property. Since stamp duty is a state tax, it varies from state to state. Not paying stamp duty can lead to the state government imposing a fine on the buyer. The penalty is levied at 2% per month and can go up to 200% of the total amount to be paid.
Under the Registration Act of 1908, it is mandatory to maintain a valid record of every transaction that happened on a property. In other words, every time a property changes hands, the transaction must be recorded and for this, the government charges the registration fee.
All property buyers must understand the importance of paying stamp duty and registration charges. Not paying these charges will lead to your property transaction being considered incomplete. It is only after you have paid the registration charges, will the property gets officially registered in your name. Paying stamp duty charges is crucial as it ensures that the buyer has a legal document that serves as proof that the property transaction is recognized by the state government and is therefore legal.
Now, stamp duty and registration charges vary from state to state. For instance, in Chattisgarh, Jammu & Kashmir, Telangana and Rajasthan, stamp duty charges are set at 5%. On the other hand, in the state of Madhya Pradesh, the state government charges stamp duty at 7.50%. Moreover, in many states, including Punjab and Haryana, the stamp duty varies based on the gender of the buyer. Female buyers have to pay a lower stamp duty than male buyers. The registration fee also varies from state to state and can range from 1% to 4% of the total value of the property. In conclusion, the stamp duty and registration charges can easily go up to 10% of the property’s value and therefore, one must take these costs into account while applying for a home loan in India.
Stamp Duty Calculator Explained
Most lenders these days offer stamp duty calculators in India. These calculators are easy to use, quick and accurate. They allow users to calculate the stamp duty payable on their property transaction. Using a stamp duty calculator to calculate the stamp duty payable on one’s property transaction is easy. Simply follow these steps:
- Select the state in which you are buying the property.,
- Enter the value of the property.
As soon as you enter these values, the calculator will give you the stamp duty that you must pay the state government to legalize your property purchase. Some stamp duty calculators ask users to also specify the gender of the buyer as stamp duty charges vary from lender to lender.
If you are planning to apply for a home loan in India, calculate stamp duty and registration charges beforehand using a stamp duty calculator and include this cost in your home loan amount. Doing so will allow you to repay your home loan comfortably and without feeling hassled. Also, try your best to avail yourself of the lowest home loan interest rates possible to make your home loan journey as smooth as possible.