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Home Loan Stamp Duty & Registration Charges in India

Published On Feb/25/2024

The thought of buying a new home can be exciting and overwhelming at the same time. You may be excited to finally buy your dream home and move into your own space, but at the same time, going through the legalities can be cumbersome.

There are many formalities that you must comply with while buying a home. If you are taking a loan to get the funds for a home purchase, you must comply with the legal paperwork required by the lender. You would have to submit many documents like income proof, identify proof, etc., apart from filling and submitting different forms.

Also, you must take care of the property registration process, paying the registration fees and stamp duty. Any delay in this process can cause a great deal of trouble for you, and can have legal implications.

But, don’t worry, in this blog, we give you an overview of the registration charges and stamp duty on home loan. So, without any further ado, let’s get started.

What is stamp duty on home loan?

When you buy a new home, you must pay stamp duty. It is a statutory charge levied by the state government on all monetary transactions. It is a mandatory charge, and if you fail to pay this fee, you will not be considered the legal owner of the property. The stamp duty on property purchase came into effect under the Indian Stamp Act, 1899.

In simple terms, stamp duty is the tax you pay the government to claim the title deed, conveyance deed, sale deed and power of attorney (as necessary). The amount you pay as stamp duty varies based on the type of property you buy and its purchase value.

Also, since the state government decides the stamp duty, the amount you pay may vary from one state to another. Apart from the state policy, there are many other factors that influence the loan agreement stamp duty on real estate assets, which are –

  • The property’s location

  • Gender and age of the property buyer

  • Type of property purchased

  • The amenities available

  • Property usage

What is property registration fee?

The property registration fee is the charge you pay to the government for registering the said property under your name. It is an important step to be the lawful owner of the house you buy. Once you pay the fee, the property registration will follow the rules laid down by the Indian Registration Act, 1908.

The property registration fee is the additional charge you pay over and above the stamp duty. Unlike the stamp duty charges, which are decided and collected by the state government, property registration charges are set by the central government of India, and they are uniform all over the country.

The registration fee is usually 1% of the property’s value. However, the fees may vary based on the type of property you purchase.

Can you include property registration charges and stamp duty in your home loan?

Since the property registration and stamp duty are overhead charges, most lenders do not cover these amounts under home loan. So, when you avail of a home loan, you must keep funds handy to meet these expenses beforehand to avoid any last-minute hassles.

You can easily find about the stamp duty charges in your state by visiting the government website. Also, you can use the stamp duty calculator. It is an online tool that works similar to a home loan EMI calculator, wherein you must insert a few basic details and the tool will compute the exact amount you must pay.

Tax benefits on stamp duty and property registration fees

The tax benefits on home loan registration charges and stamp duty are covered under Section 80C of the Indian Income Tax Act. You can claim a benefit of up to Rs. 1.5 lakh while filing your income tax returns. Apart from this tax benefit, you can claim tax deduction on the repayment of your home loan interest under Section 80EE of the IT Act.

If you purchase a home with a co-owner, and both of you take a joint home loan, you can claim tax benefits individually. However, the maximum tax exemption you get jointly is Rs. 1.5 lakh.

Final Word

Now that you know the property registration fees and stamp duty for home loan, and the importance of registering your property and paying the stamp duty to get legal ownership. Ensure that you remember these vital points while buying a home and getting a home loan for it.