Guide on how to calculate stamp duty - Raaga Mayuri Builders

Purchasing a property is a dream for many in India, and it requires careful planning as it is an important financial decision. If you are convinced of building a property, you must first check your affordability, make a budget, and then apply for a home loan if necessary.

Buying a property includes a number of related expenses that you should not overlook, including stamp duty, registration fees, Tax Deducted at Source (TDS), and Goods and Service Tax (GST). Among the most significant costs associated with buying a home is stamp duty. To complete the purchasing process, you need to pay a part of your property value as stamp duty. Get the details of stamp duty and its calculation process here:

What is stamp duty?

Stamp duty is an official proof of ownership for any kind of property, including homes, apartments, and land. The sum that must be paid during the purchase of property, as a percentage of the total transaction value, is known as stamp duty.

The actual stamp duty value is calculated during the registration process based on the valuation of the property. State governments impose stamp duty, a charge, on all documents related to a transaction, including contracts, agreements, deeds, and other related documents, in order to validate the transaction.

Stamp duty validates the papers used in the purchasing of the property and serves as a foundation for evidence if there is an ownership dispute over the acquired property. Nothing can be used as evidence in court if a document is not properly stamped. It also confirms that the property is reasonably priced.

How stamp duty is calculated?

The property's value affects how much stamp duty is calculated. Every state in India has its own criteria to calculate stamp duty. Paying for it usually involves using a government-determined circle rate concept. 

You will be required to pay stamp duty for the new property when you are about to purchase in one of three given ways:

• You can pay the duty through a bank
• Franking service that is allowed to receive such payments
• You can use non-judicial stamp paper, e-stamping, or franking. 

Franking does involve some additional fees that are authorized by the state in which you are buying the property. Stamp duty rates are also determined by taking into account a number of other criteria. The key elements are:

• Age of the property: The age of the property has a significant impact on the stamp duty that you will have to pay. It is because stamp duty is assessed as a proportion of the total market value of the property, older structures often pay less in fees, while newer construction usually pays more. 

• Purpose: Compared to residential buildings, stamp duty on commercial buildings is higher. Commercial buildings usually require a lot of facilities, floor area, and security measures, which is the main reason for this.

• Location: You need to pay a lot of money for stamp duty if your house is situated in a wealthy urban or municipal location. You will pay less to have your property stamped if it is located outside of the town or inside Panchayat borders.

• Owner's age: Senior citizens are exempt from paying stamp duty in many states, so the owner's age is also a major factor in deciding the stamp price. 

• Owner's gender: In many states, women who register a property in their names are eligible for a stamp duty fee reduction, just like senior citizens. 

• Amenities: When registering a property, the government will also charge you for each additional amenity you have on site. Various state governments list various facilities, and if they are on your property, you will need to pay more for them. Lifts, a pool, a library, a gym, a community hall, a sports area, and clubs are among the facilities.

Stamp duty in Andhra Pradesh

Within six months of the sale agreement execution, all immovable property in Andhra Pradesh needs to be registered. In 2023, the Ready Reckoner Rates (RRR) established by the state government or the properties market value would be the basis for determining stamp duty and registration fees in Andhra Pradesh. 

For example, if you pay Rs. 7,000 per sq. ft. for a property, and the area's RRR is Rs. 6,000, then the stamp duty and registration fees you must pay will be determined by any value between Rs. 7,000 and Rs. 6,000. In Andhra Pradesh, the stamp duty is 5% of the property's market value. So, if you buy a property worth one crore, then the stamp duty payable is 5 lakhs.

Stamp duty in Telangana

If you are thinking of buying a property in Telangana, you must include the cost of stamp duty, which would add up to a significant amount of your purchase. Stamp duty rates in Telangana are currently 4% of the entire cost of the purchasing property.

The stamp duty levied by the Telangana government is equivalent to 4% of the property value. There is a stamp duty of Rs. 4 lakhs if you are purchasing a property in Telangana for Rs. 1 crore.

Are stamp duty fees covered by a property loan?

Purchasers of the property must pay stamp duty fees out of their pocket because the banks don't include these costs when calculating the price of the property. So, banks only lend out 80% of the property's worth.

Also, banks use their own techniques to assess the property. It means that if a bank decides after the assessment that a property being sold for Rs 1 crore is only worth Rs 90 lakh, it will not be allowed to lend Rs 80 lakh or 80% of the proceeds. In that situation, it will provide a housing loan equal to 80% of the Rs 90 lakh, or Rs 72 lakh.