Apart from paying the amount to the seller of a property, a buyer is also liable to pay various taxes, to legally acquire the said property. The most common among these expenses, are stamp duty and registration charges on property registration. In this article, we discuss how much money you will have to pay as stamp duty and registration charge, if you are buying a property in Bangalore.
Karnataka announces stamp duty cut for affordable housing
In an attempt to give a boost to the property market, the Karnataka government, in May 2020, cut the stamp duty Bangalore charges from 5% to 3%, for properties in the range of Rs 21 lakhs to 35 lakhs. In 2019, the stamp duty was rationalised from 5% to 2%, for properties up to Rs 20 lakhs. To address the concerns of those who are looking for property priced above Rs 35 lakhs, home buyers have been asking for a flat stamp duty charge of 3% for all properties above Rs 21 lakhs.
Karnataka announces stamp duty cut in 2021
In a recent webinar, housing and urban affairs secretary, Durga Shanker Mishra, said that the ministry had been urging states to consider cutting stamp duty. Maharashtra took the lead and rationalised the rates, witnessing a boost in sales. Following this, Karnataka too announced a stamp duty cut, from the existing 5% to 3%, in March 2021. Note that this is applicable for properties priced between Rs 35 lakhs and Rs 45 lakhs. Reading out the Budget for 2021-22, Karnataka chief minister BS Yediyurappa said that the move will boost affordable housing.
Can stamp duty reduction make property affordable in Bangalore?
Let us take an example.
Suppose the property costs Rs 40 lakhs and the stamp duty charges are 5%, which works out to Rs 2 lakhs. With the stamp duty being 3% the amount would then be Rs 1.20 lakhs only. This makes it clear that the overall cost of owning a property comes down, if the stamp duty rate comes down.
However, stamp duty reduction alone, is not enough to make property ownership affordable. Registration charges too must come down, suggests an IIM Bangalore study. Authorities often fear that cuts in stamp duty and registration charges may affect the government’s revenue. However, a study done for the National Housing Bank said that such cuts encourage those looking at low-cost housing to purchase the property. Given that many more units would be constructed under the Housing For All 2022 scheme, these charges are paid by the buyers of land or built property and usually range between 5% and 13%. It results in incremental revenue and covers up for any loss in revenue due to stamp and registration fee cuts.
Stamp duty charges in Bangalore in 2021
Stamp duty rates in Bangalore are the same for men and women, unlike in most other Indian states.
|Case||Stamp duty rate||Registration charges|
|When a man, woman or joint owners (regardless of gender) buy the property||5% on properties above Rs 35 lakhs.
3% on properties between Rs 21 lakhs and 35 lakhs
3% on properties priced between Rs 35 lakhs to Rs 45 lakhs
2% on properties less than Rs 20 lakhs
|1% of the property value|
Surcharge on stamp duty in Bangalore
Besides stamp duty, you will have to reserve a budget for the cess and surcharge, as well. For properties priced above Rs 35 lakhs, a cess of 10% and a surcharge of 2% are applicable. This is in the case of urban areas. So, effectively, you will be paying 5.6% as stamp duty. In the case of rural areas, a home buyer pays 5.65% as the stamp duty, because the surcharge is 3%.
How to calculate stamp duty in Bangalore
Step 1: Simply log on to the Kaveri Online Services website or click here to be directed to the page.
Step 2: The stamp duty calculator has certain prerequisites. Fill in the nature of the document and proceed. In this case, we have selected ‘sale of flat’ as the nature of the document.
Step 3: You will be asked to fill in property details such as region type – whether BBMP, city corporation, municipal corporation, town panchayat, gram panchayat, or others. You can choose this from the drop-down menu.
Other details to be included are the indicative market value and the indicative consideration amount. What is the indicative consideration amount? To arrive at the stamp duty rates and charges, the market value is the value as worked out as per the consideration (or ready reckoner, or stamp duty) mentioned in the document, whichever is higher. If the consideration value is higher, this will be taken into account to calculate stamp duty.
If you are unaware of the market value, you can also calculate it at this stage using the calculator provided. Simply click on ‘Calculate market value’ to proceed.
Once you have filled in the details, the calculator will show you the indicative stamp duty charges, surcharge, cess, total stamp duty and total registration fees for your property.
See also: All about Karnataka Bhoomi RTC Portal
Type of property and area taken into consideration to calculate stamp duty
|Property type||Area taken for calculation purposes|
|Multi-storey apartments||Super built-up area|
|Plots||Sq ft area of plot multiplied by current guideline value|
|Independent houses||Total constructed area|
Factors that determine stamp duty charges
Note that there are many factors that determine stamp duty charges.
|Determinant||How it impacts|
|Age of the property||Older properties are cheaper|
|Age of the buyer||Senior citizens need to pay lower stamp duty|
|Gender of owner||In most states, women pay lower stamp duty. In Bangalore, rates are the same for both men and women.|
|Nature of property||Higher stamp duty for commercial properties.|
|Location of property||Properties in urban areas command higher stamp duty|
|Amenities and services||More amenities mean higher stamp duty.|
Check out price trends in Bangalore
E-stamping may replace franking in Bangalore
The Karnataka state government may make electronic stamping (e-stamping) mandatory, doing away with physical franking of documents altogether. Both procedures are modes through which the state government collects stamp duty for various transactions. Franking is done at the sub-registrar’s office but e-stamping, which was launched in 2008, is a much simpler process. The documentation is stored in a digital form in a central data bank for verification purposes. All applicants, in case of e-stamping, are given a unique certificate number, thereby, ensuring that chances of fraud are next to nil.
It is interesting to note that franking was brought in after the stamp paper scam of 2001. However, this process did not turn out to be foolproof either and the state government suffered revenue loss. By December 2020, the registration department earned Rs 6,799 crores but the authorities believe that this number could have been higher. Of late, franking fraud has become common. It is to avoid such problems that the state government may make e-stamping mandatory.
Check out properties for sale in Bengaluru.
Registration charges in Bangalore
For flats costing less than Rs 20 lakhs, the state government, in 2020, reduced the registration charges from 5% to 3%. This rate also applies to industries buying land or building. Trend watchers, however, suggest that this move would be helpful, only if properties priced up to Rs 50 lakhs are brought under its fold, given that there are very few properties priced under Rs 20 lakhs in Bangalore today.
Who pays stamp duty, the buyer or seller?
Starting July 1980, the buyer must pay stamp duty on the market value of the immovable property.
Which cities have high stamp duty rates?
Chennai, Kerala and Hyderabad are among cities that have a high stamp duty, in the range of 7% to 9%.
How much is the BBMP & Corporation added surcharges?
It comes to 2% on stamp duty.