Stamp Duty and Its Relevance - Loan Trivia


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Tuesday 28 February 2023

Stamp Duty and Its Relevance

 Buying a home is an important decision. However, when individuals decide to buy a home, they usually only think about the value of the property and the cost of borrowing the loan they would need to fund their purchase. They often tend to forget the other costs associated with buying real estate. Stamp duty is one such cost. 

Once a person has bought a property, they must get it registered in their name so that they have legal ownership over the property. When you go to get the property registered in your name, you will be asked to pay stamp duty. Stamp duty is the legal tax that a buyer must pay the state government while getting the property registered in their name. Stamp duty is charged as a percentage of the total value of the property and it varies from state to state. Stamp duty essentially serves as legal proof that the property transaction happened and during the transaction, the previous owner of the property passed its ownership to you, i.e. the new or current owner. 

It is mandatory to pay stamp duty. If you fail to do so, not only will be the property transaction be legally questionable but you will also be asked to pay a penalty at 2% per month on the total amount payable. This penalty can even go up to 200% of the total amount.

 In conclusion, stamped duty is a legal tax that state governments impose on legal transactions involving real estate. Paying this tax is mandatory and inability to do so can lead to the buyer getting penalized. The stamp duty certificate serves as proof of transaction and is therefore a crucial document.

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