Do I Need to Pay Stamp Duty on Resale Flat?

Do I need to pay stamp duty on resale flat? My brother came up to me with this question a few weeks back. I told him that buyers must arrange their own funds to cover the stamp duty and registration fees, which are among the numerous costs associated with purchasing a home. Banks don't figure the stamp charges and enrollment charges as a feature of the property estimation and issue 80% of the first property estimation as the home credit sum. This means that in addition to paying for stamp duty (which can range from 2% to 8% of the deal value) and registration fees (typically 1% of the sale value or a flat fee), the buyer must also pay the remaining 20% for the purchase. So, yes, you need to pay stamp duty on resale flats too.

Is stamp duty payable on resale flat?

The parties involved in the process are required to pay stamp duty on sale deeds in accordance with Section 3 of the Indian Stamp Act of 1899. Therefore, a sale deed must be registered regardless of whether it is being executed for a property that is still under construction, a ready-to-move-in apartment, or a secondary market apartment. So, as long as a sale deed is signed, a buyer must pay the state's stamp duty and registration fees, no matter if the property is a new project or an old one.

You will be required to pay a 1% registration fee and 2% stamp duty on the purchase of a Mumbai home that will be ready for occupancy, say, in two years. If you buy a home from the resale market, the fees stay the same. The same holds true for builders' ready-to-move-in apartments.

GST on resale properties

The Goods and Services Tax (GST) provides buyers of resale properties with financial relief.

In contrast to homes that are still in construction, a ready-to-move-in apartment does not fall under the scope of a work contract. As a result, the buyer does not have to pay GST at the time of purchase.

But if you buy a house from a developer who paid the GST for the house during its construction, those costs will undoubtedly be added to the total price. This implies that despite the fact that a receipt won't be raised and there will be no notice of the GST, the purchaser will ultimately bear the expense, at any rate.

I hope I could help you understand stamp duty on resale flat.

When purchasing a resale flat in India, stamp duty is indeed applicable. Let’s discuss some details related to stamp duty for resale flat:

1. Stamp Duty:

   • Definition

     : Stamp duty is a tax imposed by state governments on various legal documents, including property transactions.

   • Purpose

     : It validates and formalizes transactions, ensuring their legal binding.

   • Calculation

     : The amount of stamp duty is usually a percentage of the transaction value or a fixed amount. It varies from state to state.

   • Documents

     : Commonly stamped documents include sale deeds, sale agreements, leases, gift deeds, and power of attorney.

   • Uniformity

     : States charge a uniform stamp duty, whether the property is from the primary segment (new flats) or secondary segment (resale flats).

   • Registration Fee

     : Paid alongside stamp duty, the registration fee officially records and validates legal documents related to property transactions. It is separate from stamp duty and is generally a nominal charge.

   • Ready-to-Move-In Flats

     : Whether it’s an upcoming project or an old property, as long as a sale deed is executed, the buyer must pay the applicable stamp duty and registration charges.

2. GST on Resale Properties: According to the new GST tax structure, residential projects with a completion certificate or ready-to-move-in properties are not classified as a service. Hence, no GST is levied on resale of such properties.

3. Cost Implications:

   • Stamp duty typically ranges from

     5% to 7%

     of the property’s market value.

   • Registration charges are usually

     1%

     of the property’s market value.

   • These charges can amount to

     lakhs of rupees

     .

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