Stamp duty charges and registration charges: A buyer must pay various taxes in addition to the amount paid to the seller of a property in order to legally acquire the property. Stamp duty and registration fees for property registration are the most common of these costs. In this article, we’ll go over how much money you’ll have to pay in stamp duty and registration fees if you buy a home in Bangalore.
Karnataka announces stamp duty cut for affordable housing
In an effort to stimulate the property market, the Karnataka government reduced stamp duty Bangalore charges from 5% to 3% for properties priced between Rs 21 lakhs and Rs 35 lakhs in May 2020. For properties worth up to Rs 20 lakhs, the stamp duty was reduced from 5% to 2% in 2019. To address the concerns of those looking for property priced above Rs 35 lakhs, homebuyers have asked for a 3 percent flat stamp duty charge on all properties above Rs 21 lakhs.
Karnataka announces stamp duty cut in 2021
Durga Shanker Mishra, secretary of housing and urban affairs, stated in a recent webinar that the ministry has been urging states to consider lowering stamp duty. Maharashtra took the lead and rationalized the rates, resulting in an increase in sales. Following this, Karnataka announced a stamp duty reduction from 5% to 3% beginning in March 2021. Please keep in mind that this only applies to properties priced between Rs 35 lakhs and Rs 45 lakhs. Karnataka Chief Minister BS Yediyurappa stated during his Budget speech for 2021-22 that the move will increase affordable housing.
Can stamp duty reduction make property affordable in Bangalore?
Let us take an example.
Assume the property costs Rs 40 lakhs and the stamp duty is 5%, which works out to Rs 2 lakhs. With a 3 percent stamp duty, the amount would be Rs 1.20 lakhs only. This clearly shows that lowering the stamp duty rate lowers the overall cost of owning a property.
However, a reduction in stamp duty is insufficient to make home ownership affordable. An IIM Bangalore study suggests that registration fees be reduced as well. Stamp duty and registration fee reductions are frequently feared by authorities as a threat to the government’s revenue. However, according to a study conducted for the National Housing Bank, such reductions encourage those looking for low-cost housing to purchase the property. Given that many more units would be built under the Housing For All 2022 scheme, these charges are usually paid by buyers of land or built property and range between 5% and 13%. It generates additional revenue and compensates for any revenue loss caused by stamp and registration fee reductions.
Stamp duty charges in Bangalore in 2021
Stamp duty rates in Bangalore are the same for men and women, unlike in most other Indian states.
|Case||Stamp duty rate||Registration charges|
|When a man, woman or joint owners (regardless of gender) buy the property||5% on properties above Rs 35 lakhs. 3% on properties between Rs 21 lakhs and 35 lakhs 3% on properties priced between Rs 35 lakhs to Rs 45 lakhs 2% on properties less than Rs 20 lakhs||1% of the property value|
Surcharge on stamp duty in Bangalore
In addition to stamp duty, you will need to budget for the cess and surcharge. A ten percent cess and a two percent surcharge apply to properties priced above Rs 35 lakhs. In the case of cities, this is true. As a result, you will have to pay 5.6 percent in stamp duty. Because the surcharge is 3 percent in rural areas, a home buyer pays 5.65 percent as stamp duty.
Type of property and area taken into consideration to calculate stamp duty
|Property type||Area taken for calculation purposes|
|Multi-storey apartments||Super built-up area|
|Plots||Sq ft area of plot multiplied by current guideline value|
|Independent houses||Total constructed area|
Factors that determine stamp duty charges
Note that there are many factors that determine stamp duty charges.
|Determinant||How it impacts|
|Age of the property||Older properties are cheaper|
|Age of the buyer||Senior citizens need to pay lower stamp duty|
|Gender of owner||In most states, women pay lower stamp duty. In Bangalore, rates are the same for both men and women.|
|Nature of property||Higher stamp duty for commercial properties.|
|Location of property||Properties in urban areas command higher stamp duty|
|Amenities and services||More amenities mean higher stamp duty.|
E-stamping may replace franking in Bangalore
The Karnataka state government may make electronic stamping (e-stamping) mandatory, effectively eliminating physical franking of documents. Both procedures are ways for the state government to collect stamp duty on various transactions. Although franking is done at the sub-office, registrar’s e-stamping, which was introduced in 2008, is a much simpler process. For verification purposes, the documentation is stored digitally in a central data bank. In the case of e-stamping, each applicant is assigned a unique certificate number, ensuring that the possibility of fraud is almost nil.
It’s worth noting that franking was implemented in the aftermath of the 2001 stamp paper scam. However, this process was not without flaws, and the state government suffered revenue losses as a result. The registration department earned Rs 6,799 crores by December 2020, but officials believe the figure could have been higher. Recently, franking fraud has become widespread. The state government may make e-stamping mandatory in order to avoid such problems.
ALSO READ: What Is Rental Agreement And Stamp Duty?
Registration charges in Bangalore
The state government reduced registration fees for flats costing less than Rs 20 lakhs from 5% to 3% in 2020. This rate also applies to businesses purchasing land or constructing a building. Trend watchers, on the other hand, believe that this move will be beneficial only if properties priced up to Rs 50 lakhs are included, given that there are very few properties priced under Rs 20 lakhs in Bangalore today.