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Stamp Duty Calculation

Highlights

  • Know what is stamp duty?

  • How its calculated ?

  • Factors which effect stamp duty.

  • Formula used for calculating stamp duty.

Taxation Thursday, 21th January 2016   Editor: Vikas Tawar

What is Stamp Duty?

Physical transfer of the property is not sufficient, you also need to have legal ownership. At the time of registration, you have to pay a stamp duty which is a tax levied on property transactions.

How is the stamp duty calculated?

Stamp duty is calculated on the market value or the circle rate, whichever is higher. Further, it is payable only on the content of property registration agreement.

While calculating Stamp Duty following things needs to be taking care in consideration

      1)  Stamp Duty charges
      2)  Circle Rate
      3)  Plinth Area- Built up Area
      4)  Age of Construction
      5)  Cost of Construction
      6)  Calculation variance of structure- Pucca, Semi-Pucca, Kutcha
      7)  Minimum rate of built up flat

The stamp duty charges vary from state to state. The amount also depends on several other factors such as:

      1)  Old or new property
      2)  Rural or urban property
      3)  Male or female property owner
      4)  Agricultural or non-agricultural
      5)  Freehold or leasehold
      6)  Residential or commercial units
      7)  Multi – storied apartments or independent houses

To assess the market value, stamp duty authorities refer to the Stamp Duty Ready Reckoner, which is issued on 1st January every year by the government.

Formula used for Stamp Duty calculation

  1. Land Minimum cost of land = (minimum value of Land rate per sq. mtrs) × proportionate Area × use factor

      2. Minimum Cost of construction = ( Cost of construction) x ( Plinth area) x ( Age factor ) x (Structure type factor)

      3. Minimum value = ( 1+2)

      4. Stamp duty @ x% (applicable rate of stamp duty) of 3