Authenticating Transactions with India Stamp Duty
When transferring, purchasing, selling, or leasing a property, owners must add legitimacy to the transaction. In India, this is done by stamping and registering the relevant documents. The registration charge comes in between 0.5% to 3% of the market value. However, India stamp duty calculation is a bit more complex as it depends on many factors.
Here, we take a quick look at this essential levy, which is tax-deductible but not refundable. We also explain how to pay stamp duties the correct way.
Understanding Stamp Duty
Stamp duty is a term that indicates the fees due on a document to make it legitimate. It is a legal tax by the Government, chargeable on property or asset transfer documents. It authenticates ownership and registration, conferring legal status to the relevant parties.
Property owners need to know both the property value and the Ready Reckoner rates. The latter is a Government-set minimum value on the property. The stamp duty will usually be on whichever is the higher value. Generally, property buyers can expect to fork out between 5% to 9% on stamp duty charges.
However, the tax also varies according to State Governments and even the property’s location within a municipality. Other factors include the owner’s age and gender, the property’s age, and the number of floors it has. The property’s residential, agricultural, or commercial status will also impact stamp duty calculations. Hence, it’s always best to engage firms such as 3E Accounting India to ensure you’re on the right track.
How to Pay Stamp Duty in India
The process of paying India stamp duty differs according to what system is available in a particular State. There are currently three ways of doing this, and subject to availability, include the following:
- Digitally as an E-stamp: online application and payment via India’s authorised e-stamping facility, the Stock Holding Corporation of India Ltd (SHCIL). Successful applicants will receive a Unique Identification Number (UIN) and an e-stamp certificate.
- Physically as a Non-judicial Stamp Paper: property owners can purchase pre-embossed stamp papers from authorised agents. These come in various denominations, and the authenticity needs verification.
- Franking Machine: a process where a bank or agent will stamp a document with a franking machine. It is legal proof of stamp duty payment and is not a substitute for paying the stamp duty. Franking charges are free or a minimal amount of 0.1% of the purchase value.
Aside from the more mundane aspects of it, buying a property also requires tackling legal and financial matters. However, evaluating the correct India stamp duty need not be an extra concern. 3E Accounting India is ready to assist with taxation and other business needs.
We offer a comprehensive suite of services, including business advisory, accounting, company setup, etc. All our packages are customisable as we personalise the entire experience from start to finish. Contact 3E Accounting India today and let our professionals futureproof your business outcomes.