For starters, stamp duty and registration in India is a tax levied by the Government of India on legal documents or monetary transactions. It is generally imposed on sales deeds, conveyance deeds, and power of attorney papers while purchasing a property. Every property buyer has to make a provision of stamp duty charges that are pre-decided and fixed for the particular area in which the property exists.
In this article, we will talk about the stamp duty and registration charges in Mumbai.
Stamp duty charges account for up to 10% of the property amount. In contrast, the registration charges cost up to 1% of the property amount. A person can collect the property documents only after the stamp duty and registration payment. Hence, stamp duty and registration are essential while buying commercial or residential property in India.
Current update on stamp duty in Mumbai:
The stamp duty in Mumbai has increased by 1% post the State government announced an additional percentage as metro cess on property purchases, effective from April 1, 2022. The Government charges this additional cess to fund transport and infrastructure projects. Hence, this additional charge is implemented in Pune, Thane, Nagpur, and Mumbai.
Moreover, there is also good news for the property buyers- the Government has approved a bill to extend the stamp duty waiver period for investors up to three years. Previously, investors had to sell their properties within a year of buying them to qualify for the waiver. A stamp duty waiver is now available to investors who resell their property within three years of purchasing it. Stamp duty is paid only on the price difference of the property instead of the whole amount in such deals.
Current stamp duty and registration charges in Mumbai:
| Areas in Mumbai | Stamp duty rates in Mumbai for men | Stamp duty rates in Mumbai for women | Registeration charges in Mumbai | |
|---|---|---|---|---|
| Within the municipal limits of any urban area | 6% of the market value of the property | 5% of the market value of the property | 1% | |
| Within the limits of any municipal council/ panchayat/ cantonment of any area within MMRDA | 4% of the market value of the property | 3% of the market value of the property | 1% | |
| Within the limits of any gram panchayat | 3% of the property's market value. | 2% of the market value of the property | 1% |
How are stamp duty rates calculated in India?
Stamp duty rates are calculated based on ready reckoner rates. In India, the stamp duty rates vary from state to state. Moreover, the stamp duty rate depends on whether the property is within the Municipal limits, Gram Panchayat limits, and Municipal limits. Registration charges are fixed at 1%, no matter the area.
Now, let's see how the stamp duty rates are calculated-
For example,
If person Z wants to buy a 1000 sq. ft property in Mumbai located within the Municipal Limits.
The property is worth Rs. 5000 per sq. ft.
That means the ready reckoner rate of the property is Rs. 50,00,000
This means the stamp duty rate of the property is 6% of 50,00,000 = 3 lakhs.
The registration rate of the property is 1% of 50,00,000 = 50,000
So, the total stamp duty payable = Rs. 3.5 lakhs.
Tax benefits on stamp duty and registration in Mumbai:
As stamp duty and registration are unavoidable steps of property buying, every property buyer has to make provision of a massive amount to pay it. Hence, the Government has taken the stamp duty charges under tax deduction benefits.
The buyers can claim a deduction of 1,50,000 on the stamp duty charges under section 80C. However, there are certain conditions to claiming this tax benefit.
Here are some terms and conditions-
Deduction on stamp duty and registration charges can only be claimed in the year the actual payment is made towards these expenses.
Only an individual and Hindu Undivided Family, i.e. (HUF), can claim this deduction in their income tax return.
You can claim this deduction if the construction of the property is complete and the owner has legal possession of the same.
Deduction is allowed only for the new residential property and not for commercial property/resale property.
The amount against these expenses must be paid by the assessee only. The house should be in the name of the assessee who has claimed the deduction. Any other person claiming the deduction is not allowed.
Plots and land used for residential purposes are also ineligible for deduction under 80C.
Joint owners can individually claim the deduction of Rs. 1,50,000 each under section 80C.
Any other expenses paid for the transfer of property shall also be eligible for the deduction, such as service tax paid can also be claimed as a deduction under section 80C. However, such expenses cannot be claimed if the assessee has already occupied the house property either wholly or partially.
How to pay stamp duty?
There are 3 ways to pay stamp duty -
1) Franking- The process involves an agreement. This agreement is checked and further sent to an authorised bank. With the help of a franking machine, the documents are then processed.
2) Stamp paper- This is the traditional way of paying the stamp duty. The agreement details are written on paper and signed by the executants before validation. It takes 4 months to get it registered at the sub-registrar office. This process is lengthy; hence it is advisable to use the e-stamp method.
3) E-stamp- To avoid and overcome the Franking and stamp paper method issue, the Government has come up with e-stamp duty registration. The payment is made using online portals, which are done quickly. It is either an NEFT or an RTGS transaction. The advanced method prevents applicants from submitting fake/forged stamp papers. In addition, the process is highly convenient and saves time.
With this, we move into the factors affecting stamp duty charges in Mumbai:
Property owner's gender: In India, the stamp duty charges for women have a 1% rebate.
Property location: The stamp duty you need to pay varies whether the property is located in municipal limits, gram panchayat, etc.
Type of property: The stamp duty charges on commercial properties like retail and office spaces are more than on residential properties. Also, the stamp duty charges vary in flats, independent houses, etc.
Property age and amenities: The properties with high-end amenities attract more stamp duty charges than old properties with fewer amenities.
Stamp duty charges in other regions of Maharashtra:
| Cities | Stamp duty charges for male | Stamp duty charges for women | Registration charges |
|---|---|---|---|
| Mumbai | 6% (Stamp duty 5% + 1% Metro Cess) | 5% (Stamp duty 4% + 1% Metro Cess) | For properties above Rs 30 lakhs - Rs 30,000 |
| Pune | 7% (Stamp duty 5% + Local Body Tax (LBT) 1% + 1% Metro Cess) | 6% (Stamp duty 4% + Local Body Tax (LBT) 1% + 1% Metro Cess) | For properties above Rs 30 lakh - Rs 30,000 |
| Thane | 7% (Stamp duty 5% + Local Body Tax (LBT) 1% + 1% Metro Cess) | 6% (Stamp duty 4% + Local Body Tax (LBT) 1% + 1% Metro Cess) | For properties above 30 lakh- Rs. 30,00 |
| Pimpri Chinchwad | 7% (Stamp duty 5% + Local Body Tax (LBT) 1% + 1% Metro Cess) | 6% (Stamp duty 4% + Local Body Tax (LBT) 1% + 1% Metro Cess | For properties above Rs 30 lakh - Rs 30,000 |
| Navi Mumbai | 7% (Stamp duty 5% + Local Body Tax (LBT) 1% + 1% Metro Cess) | 6% (Stamp duty 4% + Local Body Tax (LBT) 1% + 1% Metro Cess) | For properties above Rs 30 lakh - Rs 30,000 |
| Nagpur | 7% (Stamp duty 5% + Local Body Tax (LBT) 1% + 1% Metro Cess) | 6% (Stamp duty 4% + Local Body Tax (LBT) 1% + 1% Metro Cess) | For properties above Rs 30 lakh - Rs 30,000 |
With this, you might have better-understood stamp duty and registration in Mumbai and the surrounding regions. Well, we have a free stamp duty calculator too! Use it, and be a step ahead in your investment process.
