While purchasing a house, a buyer needs to pay a little more than the amount the seller quoted. Stamp duty is a tax that a home buyer must pay to the government, in case of any property-related transactions. According to the Indian Stamp Act 1899, paying stamp duty is mandatory while registering any property. Therefore, while buying a home, how to calculate stamp duty is the question that comes to everyone’s mind.
Factors affecting stamp duty charges
As it is payable to the state government, stamp duty charges vary from 3-7% in different Indian states. To claim title deed, conveyance deed, sale deed and power of attorney paper, a buyer must pay this tax.
Several factors influence stamp duty of a property.
- Age of property: Age of the property plays the most crucial role while calculating stamp duty.
- Owners’ age and gender: In some states, female homeowners must pay lower charges. Furthermore, almost all the state offers concession on stamp duty for senior citizens.
- Location of the property: Stamp duty also depends on the property’s location. If property is located in a municipal area then stamp duty will be higher and if it is outskirts of a town then stamp duty will be lower.
- Project amenities: stamp duty charges also depend on the amenities the property holds.
Is stamp duty included in home loan
As stamp duty is an overhead charge, lenders usually do not cover them while approving a home loan in India. Therefore, keeping an amount aside while buying a home is essential to avoid inconvenience.
How to calculate stamp duty
For a first-time property buyer, the first thing that comes to mind is how to calculate stamp duty and registration charges. Furthermore, in the case of a loan borrower calculating a loan EMI is a tedious job.
A stamp duty calculator is an online tool that calculates stamp duty charges in a blink of an eye. In an online stamp duty calculator, a buyer needs to input the property value and select the state where this property is located. If home loan borrowers come to know the stamp duty charges they must pay then they can calculate how much they need to borrow.
While calculating home loans, a loan borrower must know about the repo rate and SLR. If the repo rate is higher, then he or she will need to take a housing loan at a higher interest rate. Also, a higher SLR will restrict the lender’s capacity to lend money.
Using a home loan EMI calculator, a borrower can calculate EMI for their housing loan. In an EMI calculator, they just need to enter the principal loan amount, tenor and home loan interest rate.
Tax benefits on stamp duty
Home buyers can get tax benefits on stamp duty under section 80C. Maximum limit is up to Rs. 1,50,000. If a property has joint owners then these owners can file their income tax return on the basis of their shares. Although, her upper limit will be Rs. 1,50,000 as well.
Many popular financial institutions extend pre-approved offers on different credit instruments like loan against property and home loans. These offers improve and fasten the whole loan application process. Eligible candidates can check their pre-approved offers by providing a few details on the lender’s website.
Stamp duty is a legal tax that a home buyer must pay to the state government while registering a property after buying. Now that one knows how to calculate stamp duty, keeping money aside for these charges will be effortless. Furthermore, while taking a house loan, the borrower must research the lender thoroughly to get an effortless and hassle-free approval.
