Understanding stamp duty and its significance for home buyers and real estate players
It is a confusing and volatile time for the real estate sector. While on one side, the pandemic has encouraged people to buy their own homes as opposed to renting, the other side shows that the sales within the real estate sector have slowed down drastically. This is because a lot of potential buyers are delaying their plans citing financial strain or are unsure about making a big financial commitment.
To boost sales in the real estate sector and to provide a necessary push to home buyers, state governments have started reducing stamp duties on the registration of properties. Maharashtra and Karnataka were the two states who took this decision in August and September respectively wherein both the governments reduced the stamp duty by 3%.
What is Stamp Duty?*
Stamp duty is a state levy paid to register a document, typically an agreement or transaction paper between two or more parties, with the registrar. Usually, it is a fixed amount based on the nature of document, or is charged at a certain percentage of the agreement value stated in the document.
Stamp duty is not uniform across states and varies for different type of documents.
This reduction helped save significant amount of money for buyers – In just a month of passing this regulation, Maharashtra saw a jump of 110% in property registrations that made them reach the pre-COVID levels seen in February this year. Seeing this, the Ministry of Housing and Urban Affairs has urged all state governments to follow suit as this could act as a stimulus to economic growth.
The Gujarat government has made no such announcement yet but real estate players are expecting a reduction in stamp duty soon so it can increase the morality of buyers. In fact, every time the government has reduced stamp duty in the past, it has been well received and has boosted not only the real estate sector but even the government treasury.
The current rate of Stamp duty in Gujarat is 3.50% and Total rate is 4.90% i.e., Rs. 4.90 for every Rs. 100/- needs to be paid as stamp duty for Gujarat Property Registration. The registration fee is 1 %.
Here’s a look at the current stamp duty rates and registration charges for immovable properties:
|Stamp Duty rates and Registration Charges For Immovable property*|
|Stamp Duty for Immovable Property|
|1||The basic rate of Stamp duty||3.50 %|
|2||Surcharge at the rate of forty percent on basic rate||1.40%|
|3||Total Stamp Duty||4.90%|
|Registration Charges for Immovable property|
|3||(For Joint name) Male-Female||1%|
|4||(For Joint name) Female-male||Nil|
While we hope and wait for the state government to reduce the stamp duties on the registration of properties, it is imperative to understand what stamp duty is and how it can benefit a home buyer. Understanding this concept will not only enable home buyers to make informed decisions but will help them feel empowered and confident about their investment.