A property investment journey has several nuances to it. Without the correct knowledge, the whole process can seem overwhelming to new buyers. On the other hand, when you have proper information with you, it can be the most rewarding experience. Every property buyer in India has to pay stamp duty charges and registration fees. In this blog, we guide you through the concepts of stamp duty and registration charges in detail. Read on for complete information about the registration and stamp duty rates in Mumbai, Maharashtra.

What is Stamp Duty?

As a real estate investor, one may buy a flat / apartment, a standalone house, a commercial property, or a land plot. The Indian Stamp Act's (1899) Section III mandates individuals to pay a certain percentage of the property's total value as stamp duty. Stamp duty is charged as a tax to verify the legality of all documentation and paperwork associated with the deal - including sales agreements, deeds, contracts, etc. It comes under the state government's purview.

Therefore, when you purchase a property, you need to register it in your name at the local registrar’s office. It helps you get recognised as the legal owner in municipal records. At the time of this registration, you must pay the applicable registration charges and stamp duty on value of property to the concerned authorities.

In the case of Mumbai, stamp duty is levied under the Maharashtra Stamp Act (1958). Since Mumbai is a leading property market offering projects by reputed developers, it contributes substantial revenue to the Maharashtra government through stamp duty collection.

Significance of Stamp Duty and Registration

The compulsory registration and stamp duty payment proves critical in the event of potential disputes concerning the property's ownership. It serves two key purposes -

1. Stamp duty can be used as a valid evidentiary tool in court, since stamped property- related documents denote legal compliance.

2. It indicates fairness in pricing, since the stamp duty on sale of property depends on its market value.

Stamp Duty vs Registration Charges

Stamp duty and registration charges are different from each other. They are charged separately and the stamp duty percentage in Mumbai also differs from the registration fee percentage. While stamp duty's intent is to legally validate property documents, the role of registration charges is to ensure your property details are stored in the local municipal records.

Which Properties do Stamp Duty and Registration Charges Apply to?

Both stamp duty and registration charges apply to different property types, such as:

• Commercial real estate
• Residential real estate
• Leasehold & freehold land (including agricultural & non-agricultural properties)

What are Mumbai's Stamp Duty Rates & Registration Charges?

Below is a breakdown of the stamp duty rates and registration fees levied on property buyers in Mumbai.

Stamp Duty Charges in Mumbai:

The applicable stamp duty percentage in Mumbai varies according to the following factors:

• Gender

Male buyers have to pay 6% of the property's market value (including 1% metro cess) as stamp duty in Mumbai. Female buyers have to pay 5% as stamp duty, also including 1% metro cess.

• Location within Mumbai

For the purpose of stamp duty taxation, Mumbai is segregated into three categories:

1. The area falling within Municipal limits
2. The area falling within Gram Panchayat limits
3. The area falling within the limits of the Panchayat / Municipal Council / Cantonment of any area within MMRDA (Mumbai Metropolitan Region Development Authority)

The stamp duty is charged at 6%, 3%, and 4% of the market values of the properties respectively for the above three locations across the city.

Registration Charges in Mumbai:

Unlike stamp duty, registration charges are the same for all property buyers in Mumbai, regardless of their gender. However, they vary based on the location and price of the property.

The area-wise categories for registration charges are the same as those mentioned before under the stamp duty charges:

1. The area falling within Municipal limits
2. The area falling within Gram Panchayat limits
3. The area falling within the limits of the Panchayat / Municipal Council / Cantonment of any area within MMRDA (Mumbai Metropolitan Region Development Authority)

Under all three, the registration charges are levied at 1% of the market value each, for properties whose price is lower than INR 30 lakhs. However, for properties whose price is above INR 30 lakhs, the registration fee is fixed at INR 30,000 under all location categories.

Factors Affecting Stamp Duty and Registration Charges

Below is a list of various factors that impact the stamp duty rates and registration charges levied on property buyers in Mumbai:

• Residential vs Commercial Properties

A residential property is usually charged a lesser stamp duty percentage compared to a commercial property. This is because the government wants more people to invest in homes in Mumbai.

• Jurisdictions in Mumbai

The area jurisdiction under which the property falls affects the stamp duty and registration charges in Mumbai. The stamp duty on sale of property is higher when it is located in municipal areas and urban regions, as opposed to those situated in rural panchayat localities.

• Property's Attractiveness

A property's market value depends on how new it is, how sought after its location is, the amenities it offers, and its size, among other things. As a result, the stamp duty on value of property tends to be higher for premium or luxury real estate in prime locations.

• Buyer's Gender

If you are a woman buying a property in Mumbai, the Maharashtra government offers you a 1% rebate on stamp duty levied on male property owners.

To encourage property investments in Mumbai - especially during specific periods of the year - the state government may announce concessions, waivers, or other incentives on stamp duty.

Calculating Stamp Duty in Mumbai

The property's value and its ready reckoner rate are the two variables based on which stamp duty is calculated in Mumbai. The state government provides a ready reckoner rate for real estate transactions, which denotes the minimum value at which one can legally purchase a given property in the city. The fixed ready reckoner rate usually reflects the nation's economic conditions at the time. Stamp duty is charged according to either the property price or the ready reckoner rate - depending on which one is higher.

• Manual Calculation

Take a 1,000 sq. m. apartment in Mumbai, whose ready reckoner rate is INR 20,000 per square metre. Therefore, the minimum value of the property = 20,000 x 1,000 = INR 20,000,000 (i.e. INR 2 crores).

But say the property is priced at INR 25,000,000 - then the stamp duty will be calculated on its basis since it is the higher value. Therefore, considering the 6% stamp duty applicable to a male homeowner in Mumbai, the stamp duty levied on this flat will be:

6% of 25,000,000 = INR 1,500,000/-

• Using Online Stamp Duty Calculator

An easier way to calculate stamp duty is using a stamp duty calculator, a tool that is commonly available online. All you need to do is search online and visit the website of a stamp duty calculator. Then enter details such as the state, jurisdiction, the property's ready reckoner rate and market value, etc. Within seconds, it calculates the stamp duty charges payable!

Payment Methods for Stamp Duty & Registration Fees

Property owners in Mumbai can pay both the stamp duty and registration charges online through the Maharashtra government's GRAS (Government Receipt Accounting System) portal. You can pay the two fees together or separately using any of the various online payment modes. Registration for payment is also optional. Once the online payment is successfully done, you will get a challan with important details such as the reference number, branch code, PRN number, CIN, etc. Alternatively, you can deposit your stamp duty and registration fees in certain nationalised banks. The bank will provide you with a challan or payment certificate in 2 to 3 days.

Tax Deductions

Under Section 80C of the Income Tax Act (1961), property owners in Mumbai can claim a tax deduction on registration charges and stamp duty. This benefit can be availed by individuals, HUFs (Hindu Undivided Families), and joint owners - subject to specific conditions. The maximum deduction allowed in any case is INR 1.5 lakhs.

Conclusion

Buying a property in Mumbai is the ultimate dream of many. But to realise this dream, you must have a thorough understanding of stamp duty on value of property, registration charges, and more. Bookmark this article and contact K Raheja Realty for in-depth insights on everything about real estate!