The Ultimate Guide to know about Stamp Duty on Property Investment - Srijan Realty

The Ultimate Guide to know about Stamp Duty on Property Investment

With time, long-term benefits and equity building make real estate the most valued investment field. Do you want to invest in the real estate market? Then, understanding the tax values of the purchases should be your top priority. Because it can become a burden for the buyers who have a limited budget.

The paperwork ensures that you spend a fair amount during the property investment. And, two major one-time cost-consuming aspects are – registration fees and stamp duty.

After a sale deed is processed, you must pay the stamp duty, based on Section 3 of the Indian Stamp Duty Act, 1899, on all documented financial transactions. Thus, it is essential to understand the consequences before you proceed.

What is stamp duty?

Based on property transactions, Stamp duty on property is a tax levied by the government, and the state government collects it. This acts as proof of ownership or property possession.

If there is any conflict, stamp duty will act as legal evidence, making the property papers legally permissible. The state government decides the rate of the stamp duty, and thus, it differs from state to state.

For example, if you plan to buy a property in Kolkata, it will be 5 – 6% of property value; in Chennai, it will be 7% of the property value, and in Hyderabad, it will be 4 % of the property value.

Documents required to pay the stamp duty?

You need to pay the stamp duty on:

  • Bills of exchange
  • Letters of credit
  • Promissory notes
  • Property transactions

Factors on which Stamp duty is based

There are a few factors that are considered while calculating the Stamp duty on property:

  • Value of the property
  • Type of property – can be independent or shared.
  • The age of the property – can be new or old, which decides the valuation
  • Amenities on the property – the listed is decided by the government
  • Location of the property, the area, and state
  • Usage of the property – can be residential or commercial
  • Age of the owner – there is a concessions scheme for senior citizens
  • Gender of the owner – concessions are offered to women owners in a few states

Stamp duty can increase the overall cost, but there is no way to escape that. So, when planning the property investment, this must be included. In India, stamp duty rates generally range from 4% to 9? sed on the market value of the property.

How is the stamp duty calculated?

Stamp duty on property is calculated on either of these aspects, whichever is higher:

  • The consideration value – The total amount that both the parties agree upon on purchase.
  • The guidance value or circle rate – The property’s minimum value based on which the property will be registered. And, this is decided by the competent authority associated with the state government.
  • Valuation of property – This is based on several factors such as property type, year of construction, etc.

If both the parties do not come to the same terms, then the property’s purchaser needs to pay the stamp duty. In the case of exchange properties, the amount gets divided equally. Further, stamp duty also differs based on commercial property and gifted property.

What if you fail to pay the stamp duty?

People try to evade stamp duty on the property without knowing its legal consequences. If you fail to pay the charge, it is counted as a legal offense, and you have to pay the penalty. Usually, a penalty of 2 percent of the outstanding amount per month is charged, along with the outstanding amount. Be aware, the penalty could reach 200 per cent of the original liability.


Homebuyers now have a great opportunity as certain states such as Maharashtra, Karnataka has reduced the stamp duty on property purchases due to the effect of the pandemic on the real estate market. So, this is a morale boost for those looking for a house on sale. Get in touch with the executives to buy a legal property with


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