All about Stamp Duty and Registration Charges:

Stamp Duty and Registration Charges in Bangalore are two crucial things you should know while you wish to buy a flat/apartment in Bangalore and applying for a home loan. So, if you are planning to buy a property in Bangalore and have a set budget for the same then you must consider these two charges which you will have to pay for getting your property registered. While Stamp Duty is levied by the state governments on the market value of the property, registration value is levied for registration of documents under the Registration Act, 1908. Most of the states have 1% as Registration Charges.

The government levies a tax when there is a transaction of property or transfer of rights in a property known as “Stamp Duty”. Stamp Duty is imposed on residential and commercial property transactions as well as freehold or leasehold properties. It is one of the most crucial documents as it provides legal status to the property transaction.

Stamp duty is a state matter and is fixed by the state government. So, the rate varies from state to state. Stamp duty is a charge payable on the sale agreement, on or before the date of registration of the agreement.

It depends on factors such as the location of the property, type of property, property status, and gender.

You can avail tax deductions for these two charges if paid within the overall limit of Rs 1.5 Lakh and only in the ready-to-move-in property. The assessee is the only authorized person for the tax benefits on stamp duty and other registration charges for a particular property and not any other family member. All these tax deductions are only valid for a residential property as the commercial property does not come under the limits of this.

To calculate the registration fee and Stamp duty, different standards are used for different property types in Bangalore:-

• For multi-story apartments in Bangalore, the super built-up area is considered for calculation
• For plots in Bangalore, the sq ft area of the plot is multiplied by the current Guidance Value of that area
• For independent houses, the total built area is estimated

How to register your property online in Bangalore?

The Karnataka government recently launched an online portal to allow property owners to access property-related documents, rather than visiting the sub- registrar’s office. There are over 250 sub-registrar offices listed on the portal where people can make their property registration.

Visit Karnataka Govt’s KAVERI portal i.e., https://kaverionline.karnataka.gov.in and register as a new user and follow the step-by-step instruction

How are stamp duty and registration charges calculated in Bangalore?

To calculate stamp duty and registration charges in Bangalore, follow these simple method-

Let’s assume you have finalized a property measured 1,000 sq.ft. in Bangalore. The Guidance Value is Rs 6,000/sq.ft. Next, there is the parking charge of Rs 2 Lakh and floor rise charge of Rs 30/sq.ft.  Now, let’s say that the property is located on the 5th floor, then your floor rise premium will come up to Rs 150 per sq.ft. (30*5=150). Thus, the total base price will be Rs 6,150/sq.ft.

• Saleable value of the property = 1,000 x 6,150 = Rs 61,50,000 (basic cost) + 2,00,000 (car parking) = 63,50,000
• Registration charges = 1 % of 5,325,000 = Rs 63,500
• Stamp duty = 5.6 % of 63,50,000 = Rs 3,55,600
• Thus, the total cost of property = Rs 67,69,100

Why is stamp duty important?

It is one of the most significant or essential documents that provide legal status to your property transaction. At the same time, it generates revenue for the state.

How much is the stamp duty and registration charges in Bangalore? And how it is calculated on property transactions?

Stamp duty is charged only on the total saleable amount of the property, which is calculated by first multiplying the size of the property with its guidance value or the market value given by the builder. Then, car parking and floor rise charges, or preferential location charges (PLC) are added to give the total saleable value of the property.

Saleable Value = Basic Cost (Size of property x Guidance Value) + Parking Charges + Floor Rise Premium & Preferential Location Charges (PLC), if any.

Registration charges = 1%of the saleable Value

How can I pay stamp duty and registration charges in Bangalore?

You can pay these charges in the sub-registrar’s office through the following means for property registration in Bangalore:

• Purchase stamps from the treasury or authorized stamp vendors
• Made payment to the government through DD/ pay order issued by any nationalized bank/scheduled bank or challan
• The document can be written or printed on plain paper, and the stamp duty can be paid through DD/ pay order issued by any nationalized bank/ scheduled bank or challan within two months of the date of execution of the document and certified by the jurisdictional district or sub-registrar.
• In some states, you can also pay the necessary stamp duty amount online or, through RTGS/NEFT.

Are there any tax gains on payment of stamp duty and registration charges?

Yes, there are multiple deductions. you can avail tax deductions for these two charges if paid within the overall limit of Rs 1.5 Lakh. But, there are some restrictions added to it. These include:

• All the deductions are only valid for a new property and not for resale property.
• The payments must be made in the previous financial year as payments made later are not acceptable for a tax deduction. If you bought a house in the financial year 2018-19 for Rs 50 Lakh and paid Rs 5 Lakh as stamp duty and registration charges, then you are qualified for tax benefits calculated during the 2019-20 financial year, only if all the expenses have been paid during 2018-19.
• You can claim tax deductions only for the ready-to-move-in property and not for under-construction or completed property.
• As per Section 80C of the Income Tax Act, the maximum limit for tax benefit is set at Rs 1.5 Lakh.
• All these tax deductions are only valid for a residential property as the commercial property does not come under the ambit of this, one can not get any tax rebate for that.

What are the key factors that determine stamp duty Charges?

The stamp duty percentage depends on various factors. These include:

The property’s age:

Since stamp duty is calculated on the total value of the property, the age of a property plays a significant role in setting stamp duty charges because older properties manage to be less expensive than newer properties.

Age of the property holder:

Senior citizens usually pay a lower stamp duty charge in most states. This is why the age of a property holder plays an important role in determining stamp duty charges.

Type of property:

You have to pay more stamp duty for a flat/apartment comparison to an independent house, etc.

Gender of the Owner:

Women usually pay a subsidized stamp duty fee when compared to men in India. Men have to pay about 2% more than a woman.

Purpose of the property:

Commercial properties normally attract a higher stamp duty fee in comparison to residential properties. This is so because commercial buildings would normally need a lot more amenities when compared to a residential building.

Location of the property: 

The location of the property also determines the stamp duty fee payable by an individual. A property located in an urban area attracts higher stamp duty than a rural or suburban area.

Amenities:

The number of amenities that a property has also directed the stamp duty fee. A building with more amenities requires a higher stamp duty fee while a building with lesser amenities will have a lower stamp duty fee. Amenities like a community hall, library, swimming pool, gym, club, sports area, lifts, gym, children play area, etc., will need an individual to pay a higher stamp duty fee.

Stamp Duty Calculator

Stamp Duty ranges from 3% to 10% depending on the slab decided by the state government. It is calculated on the higher value between the Guidance Value (circle rate/ready-reckoner rate) and the agreement value of a property. For instance, if the agreement value of a property is Rs 60 lakh and the value according to Guidance Value is Rs 50 lakh, then the stamp duty would be calculated on the higher value, i.e., Rs 60 lakh

What happens, when someone pays insufficient stamp duty on their property?

For saving stamp duty, many people show a reduced property price in their agreement. As a result, the government has to suffer heavy revenue loss. If you pay insufficient stamp duty, you can be penalized huge for the same. The punishment and penalty for evasion of stamp duty may vary from state to state. The penalty can range anywhere from 8% to 20% of the actual stamp duty and term of imprisonment as per the state rules.

 Data sources: Google