Buying a house involves quite a lot of procedures and attracts a slew of statutory charges. It’s always better to know about these in advance, particularly about the latter, to avoid unpleasant surprises later on. Let’s get to know in detail about the stamp duty and registration charges applicable when buying a house in Bangalore.
Stamp duty and registration charges vary from state to state. More importantly, these charges make your house costlier. But what exactly are stamp duty and registration charges?
Section 3 of the Indian Stamp Act 1899 mandates the collection of these charges for the following reasons:
1) To authenticate the sale agreement.
2) To maintain a record of the property. It’s the state government that decides and fixes all charges that are collected towards stamp duty and registration.
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Let us assume that Anita is buying a property worth Rs. 80 lakh in a posh locality in Bangalore. She will pay this sum to the seller and stamp duty, registration charges, surcharge (which is a tax levied on tax), and cess (a form of tax over and above the base tax liability of the taxpayer).
Anita will be charged stamp duty at 5.6% of the property cost, which will come up to Rs 4,48,000. Furthermore, the state government will levy registration charges at 1% of the property value, amounting to Rs 80,000.
Anita will also have to pay a cess charged at 10% of the stamp duty, amounting to Rs 44,800, and another surcharge calculated at 2% of the stamp duty, which will come up to Rs. 8960.
So, while Anita’s property will cost Rs.80 lakh, the additional charges will add up to Rs 5,81,760. Therefore, the total cost of her property value will be Rs 85,81,760 plus GST.
Stamp duty and registration charges are mandatory fees you’ll pay when purchasing a property in Bangalore. These charges are levied by the Karnataka state government.
The registration fee is a flat 1% of the property’s market value or the consideration amount (sale price), whichever is higher. This fee applies to all property purchases irrespective of the value.
Here’s an example to illustrate:
Let’s say you’re buying a flat in Bangalore for Rs. 50 lakh.
Stamp duty = Rs. 50 lakh * 5% = Rs. 2.5 lakh
Cess = Rs. 2.5 lakh * 10% = Rs. 0.25 lakh
Surcharge (assuming urban area) = Rs. 2.5 lakh * 2% = Rs. 0.05 lakh
Total stamp duty = Rs. 2.5 lakh + Rs. 0.25 lakh + Rs. 0.05 lakh = Rs. 2.8 lakh
Registration fee = Rs. 50 lakh * 1% = Rs. 0.5 lakh
Total charges = Stamp duty + Registration fee = Rs. 3.3 lakh
Property charges prove to be beneficial to home buyers as it ensures the following, under Section 3 of the Indian Stamp Act 1899:
Upon paying the property registration charges, the property will legally be under your name. This crucial document authenticates the sale and makes you the new owner of that property.
You pay registration charges so that the Government keeps a record of the property. Without this, the previous owner will continue to be considered the owner of the property.
Stamp Duty and Registration Charges ensure that the property is legally transferred to you. These charges are applicable on all kinds of properties, be it under-construction, newly completed, or re-sale.
Stamp Duty is payable on the value of the property or on the circle rate, whichever is higher. A circle rate is the price of property or land in a region that is published and regulated by the State Government. Stamp duty on registration of various instruments is imposed under the provisions of the Indian Stamp Act, 1899.
The Stamp Duty is called so because the stamp mark on the documents implies that the paper has assumed approval of the authorities and is now of legal significance. Stamp duty is also applicable on conveyance deeds, sale deeds, and power of attorney papers, but the charges vary in different states.
The buyer must submit a host of documents at the time of property registration, depending on the type of property. These are some important documents to be arranged at the time of registration:
While Stamp Duty is paid to transfer the property to your name, Registration Charges are paid as per the Registration Act, 1908, to the Government to maintain it in its registry. This must be done within four months from the date of execution after the stamp duty is paid.
Unless the registration is complete, an entitlement of the property is invalid, and the property will still be under the previous owner’s name. Hence, it is important to register the property in the Sub Registrar of Assurances of the Jurisdiction’s office, where the property is purchased.
These two factors are calculated based on different types of properties depending upon different city laws.
– Super built-up area is considered for calculation for multistorey apartments
– Charges on individual houses are calculated as per the constructed area
– For plots, the sq. ft. area of the plot is multiplied by the predominant guideline value of that area
Whether you are opting for a budget house or a luxury house, whether your choice of location is an urban setting or a rural area, knowing about the charges towards stamp duty helps you greatly. One of the most important advantages is that it lets you be in control, in terms of budget. Make sure that you do your research thoroughly before buying your house.
Planning is Key: Knowing these charges upfront helps you factor them into your property budget.
Consider the Total Cost: Remember, the stamp duty and registration fee add a significant amount to the final property price.
Check for Exceptions: There may be exemptions or reduced rates for specific categories of buyers (like first-time homebuyers). Explore the government website for details.
Seek Professional Help: A real estate lawyer or tax consultant can provide guidance on calculating the exact charges for your specific case.
By understanding these final points, you can make informed financial decisions while buying property in Bangalore.
Stamp duty: A tax levied by the government on the transfer of property. Registration fee: A fee paid to register the property ownership with the government.
The stamp duty rate depends on the property's market value: 2% for properties below Rs. 20 lakh 3% for properties between Rs. 21 lakh and Rs. 45 lakh 5% for properties above Rs. 45 lakh
Yes, there are additional charges for properties above Rs. 35 lakh: Cess: 10% on the stamp duty (urban areas) Surcharge: 2% on the stamp duty (urban) or 3% (rural)
The registration fee is a flat 1% of the property's market value or the consideration amount (whichever is higher).
Multiply the property value by the stamp duty rate and add any applicable cess and surcharge. Then, add 1% of the property value for the registration fee.
There may be reduced rates for specific categories like first-time homebuyers. Check the Karnataka government's Department of Stamps & Registration website for details.
