When a property transfers hands from the seller to the buyer, the government imposes a tax. Stamp duty is the name for this tax. Residential and commercial property transfers, as well as freehold and leasehold properties, are subject to this tax. The rate of stamp duty varies from one state to the next because it is levied by the states. The stamp mark on the documents attests to the fact that the paper has obtained official approval and now has legal validity, hence the name of the levy.
While stamp duty is a tax that states levy depending on the transaction value, the registration fee is the amount that consumers pay for the service of registering a contract or deed with the government. To put it another way, the government keeps a record of documents in exchange for a fee.
Imposed Stamp Duty
Registration fees are usually set by the center and are, for the most part, fixed cross states. A standard fee is also charged by several states as part of the registration process. Stamp duty and registration fees are usually the third or fourth most important source of tax revenue for states, and they make a major contribution to their annual GDPs.
Stamp Duty Calculation
The single most important criteria in determining whether or not stamp duty will be charged on a property transaction are the transaction’s value. It’s important to remember at this point that district administrations are in charge of determining a standard rate for land and other property below which a transaction cannot be registered. Even if a property is purchased for a lesser price than the current circle rates, stamp duty will be charged on the property’s circle rate value. If the transaction is worth more than the circle rate, the fee will be calculated based on the deal value rather than the circle rate value. You may use a stamp duty rate calculator.
Responsible for Stamp Duty and Registration Charge
Despite the fact that the law nowhere states that the buyer must bear the cost, the buyer is responsible for stamp duty computation and the registration fee in all transactions.
The real estate industry has also been lobbying for stamp duty exemptions for affordable homes. Buyers in this segment could save a lot of money if this happens. Developers will sometimes agree to cover the expense of stamp duty and registration fees. However, you must be careful not to be charged for it in an indirect manner.