Stamp Duty on Building Agreement
Stamp duty is a tax levied by state governments in India on property transactions. In the case of building agreements, stamp duty is levied on the transaction value of the agreement. Building agreements are legal documents that establish the terms and conditions between the builder and the buyer for constructing a building or a housing unit.
Stamp duty on building agreement is one of the major costs that a homebuyer has to bear while purchasing a property. The rate of stamp duty varies from state to state, and it is calculated as a percentage of the transaction value of the agreement. In most states, the stamp duty rate for building agreements ranges from 4% to 8% of the transaction value.
Stamp duty charges are applicable on both the builder and the buyer. The builder has to bear the stamp duty charges for the original agreement, while the buyer has to bear the charges for the sale deed. In case of resale of the property, the buyer has to pay the stamp duty charges for the original agreement as well as the resale deed.
It is important to note that stamp duty charges are not the same as the registration fee. Registration fee is charged for registering the sale deed with the sub-registrar, whereas stamp duty is charged for validating the agreement between the buyer and the builder.
Stamp duty charges can be a significant amount, especially for high-value properties. However, it is a mandatory cost that cannot be avoided. Failure to pay the stamp duty can lead to legal consequences and the transaction being deemed illegal.
Stamp duty charges can also have an impact on the home loan amount that a buyer is eligible for. Banks and financial institutions take into account the stamp duty charges while calculating the loan amount. Therefore, it is essential for buyers to factor in the stamp duty charges while budgeting for their property purchase.
In conclusion, stamp duty on building agreement is an essential cost that homebuyers have to bear while purchasing a property. It is a mandatory tax levied by state governments and varies from state to state. It is important for homebuyers to factor in the stamp duty charges while budgeting for their property purchase and ensuring timely payment to avoid legal consequences.