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Tata Capital > Blog > Loan for Home > How Are Stamp Duty Rates Determined in Property Transaction Cases?

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How Are Stamp Duty Rates Determined in Property Transaction Cases?

How Are Stamp Duty Rates Determined in Property Transaction Cases?

Stamp duty is an indirect tax levied by state governments on all property transactions, be it residential or commercial. Authorities collect it to boost local revenue and award legal status to any property purchased.

Earlier, you could only pay this duty offline, but today, you can do it online by logging onto the official portal and selecting the state in which you wish to purchase the property. Know that different states have different duty rates. Why? Let's find out.

How are stamp duty rates determined for property transactions?

Relevant state authorities set a duty on properties based on circle rate or the average market value (whichever is higher) for different cities within their state. It typically falls anywhere between 5% to 7% of the area circle rate or property's market value.

But, these are not the only parameters that help determine stamp duty registration rates. Here are a few other factors taken into consideration, as well.

  • How do owners intend to use the property? Is it residential or commercial?
  • Where is the property located? Is it in a rural or an urban area? Duty charges are usually lower on properties purchased in rural areas.
  • Authorities also include any other state or central taxes in duty charges.

Additional Read: Change in Stamp Duty Rates for Home Registration

Can home loans cover duty charges on properties?

Usually, lending institutions don't cover duty charges or registration fees as part of home loan. The homebuyer bears them. However, you can seek a personal loan, which is affordable and readily available these days, to cover the fringe costs associated with purchasing a new property.

How can I calculate duty specifically for my state?

The quickest way to figure out the latest duty rate for your state is by using a stamp duty calculator online. Once you open this digital calculator, type your state and property value, and it will instantly calculate the duty you must pay.

For instance, if you choose the state as Gujarat and the property amount as Rs. 50 lakhs, your total duty charge will come out to be Rs. 1.75 lakhs.

Is there a way to reduce duty charges?

Needless to say, state authorities fix the duty charges, and they are non-negotiable. However, there is a way to reduce the duty on property. How? By purchasing one in the name of your wife, mother, or sister.

States offer women significant subsidies on property duty. You'll easily find cities with a difference of 2% in duty rates between men and women. This can make a huge difference, especially when you're buying a home in cities like Mumbai and Delhi, where housing comes at a premium.

Additional Read: Here Are Some of the Things You Should Know About E-Stamping

Over to you

Want to purchase a property this year? Well, then check the latest duty rates, registration charges, and home loan interest rates on housing finance.

You'll find some of the most affordable ROIs being offered at Tata Capital. While you may be unable to negotiate duty charges, you can certainly negotiate your loan repayment tenures with us. We also extend our housing loan services online in exchange for minimal paperwork.

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