Stamp Duty

Stamp duty is a pre-requisite condition, which has to be paid before taking possession of the flat. It is essential to pay the requisite stamp duty every time one purchases a new flat or even when it is transferred within the family.

• Stamp Duty for Flats Present rates of stamp duty for residential premises in the city of Mumbai above Rs.5,00,000/- is Rs.8750/- plus 5%
• Stamp Duty for Shops/ Galas/ Office Premises & Garage The rate of Stamp Duty for Shops/Galas/Office Premises and Garage even if used for car parking is 5% in Mumbai.

A stamp duty is a kind of tax that is levied on the transactions concluded by way of documentation or instruments. The tax was sealed by the Bombay Stamp Act (1958).

As per the regulations of this Act, the buyer must pay a 5% stamp duty on the cost of the flat. This payment is a pre requisite for the full ownership of property and the consequences for evasion of stamp duty can even lead to imprisonment. For residential spaces that cost above Rs. 500,000/- , the purchaser must pay an excess stamp duty of Rs. 7650/- (plus 5%). For commercial spaces, the stamp duty is simply 5%. However, these rates are subject to change.

Once the buyer decides to purchase a residential property, the stamp duty is calculated according to the agreement value or the market value, whichever is higher. The investor will then need to obtain a pay-order, which must be addressed in favor of "Superintendent of Stamps, Mumbai". After the submission of the pay-order, the agreement is completed and signed by all parties.

Registration Fees:

The registration fee at present fixed for registering documents relating to property transactions are approximately 1% of the market value or agreement value whichever is higher subject to Maximum of Rs.30,000/- [from 1-4-2003]. The registration fee for the following immovable property transactions is leviable on the market value of property on which stamp duty is charged:
The procedure also includes a registration fee for properties costing more than Rs. 30,000, which is fixed at 1% of the market value or the agreement value, whichever is higher. Once again the value is subject to change. The procedure can only be completed under the presence of two eye-witnesses. When a receipt with a distinct serial number is issued, the procedure is complete.

VAT: The Maharashtra goverment has come up with the new 1% VAT taxation for all the Flats Registration done on or after 1st April 2010.

Service Tax is applicable on all payments received from 1st July, 2010 onwards on 25% of the amount received @ 10.3% i.e. (25% * 10.3% = 2.575%)