If the immovable asset gets a new owner, the owner needs to pay a certain tax to the government to get stamped and registered in the new owner’s name. This tax is known as stamp duty and registration charges are implied on immovable property. The state’s Stamp Act specifies these assets on which the stamp duty charges need to be paid to the state government.
With the COVID-19 pandemic, the real-estate industry has taken a massive hit. The sales went down, but slowly it’s regaining the nos and surely are growing up. To enhance the sales and growth of the real estate industry, the sector is in demand of stamp duty reduction. Many states gave the sector relief through stamp duty reduction on immovable assets.
Stamp Duty Reduction in Different Parts of India
Many Indian states have imposed stamp duty reductions to develop the real-estate sector. Here are the few prominent states of India that reduced the stamp duty in the past or have still imposed stamp duty reduction on properties.
| Name of Indian Region | Stamp Duty Reduction |
| West Bengal | 10% circle rate stamp duty reduction on immovable property, 2% stamp duty reduction on prevailing duties for the documents, 2% rebate on the prevailing stamp duty rate on transportations. |
| Delhi | Circle value reduction of 20% for residential, construction of residential/commercial, or built-up homes of 4 storeys/more than 4 storeys, i.e., 20% registration reduction and stamp duty reduction. |
| Karnataka | 2% stamp duty reduction for the properties below ₹ 45 lakhs in the state. |
| Maharashtra | 3% stamp duty reduction till December 31, 2020, and 2% stamp duty reduction from 1st January 2021 to 31st March 2021. Now the stamp duty is back to 5%. |
| Rajasthan | 2% stamp duty reduction in the state was applicable till September 2021. |
Stamp Duty Reduction – Maharashtra
The real estate industry has pushed for a stamp duty cut again, alleging the second wave of the COVID-19 pandemic for the slowdown in sales.
CREDAI-MCHI, the real estate representation organisation, has written separate letters to chief minister Uddhav Thackeray, deputy chief minister Ajit Pawar, who also holds the fiscal responsibility, and revenue minister Balasaheb Thorat, requesting that stamp duty reduction to 2% till March 2022.
The Maharashtra government opted not to prolong the waiver on stamp duty and registration expenses in Maharashtra beyond March 31, 2021, after announcing a stamp duty rate drop in August 2020. For 2021-22, the state has likewise left the ready reckoner rates untouched.
The decrease in Maharashtra’s stamp duty reduction from September 1, 2020, to December 31, 2020, and from January 1, 2021, to March 31, 2021, was a welcome step, particularly in Mumbai and Pune, where property costs are already high.
Despite the economic pressures created by the second wave of the Coronavirus epidemic, Mumbai experienced a large increase following this announcement on stamp duty and registration expenses.
To illustrate, if the cost of a property in Mumbai is Rs 1 crore, the stamp duty in Mumbai to be paid during the time from September to December 2020 was Rs 2 lakh and from January to March 2021 was Rs 3 lakh, as opposed to the Rs 5 lakh that home buyers must pay now because the stamp duty in Mumbai is currently 5%. As a result, property buyers saw a clear savings of Rs 3 lakh or 2 lakh.
In its budget for 2021-22, the Maharashtra government also proposed a 1% stamp duty reduction in the state on property transactions if the transfer of dwelling property or registration of sale deed is done in the name of a woman.
Stamp Duty Reduction – Delhi
The Lt. Governor of the National Capital Territory of Delhi, in a notification dated February 26, 2021, bearing the number No. F. 1(2854)/Regn.Br./Div.Comm./HQ/2020/5453 (Notification), granted relief to the registrant public and granted a 20% reduction in the circle value of immovable properties located in Delhi for the following categories:
- Residential
- Construction costs for a single-family home
- Construction costs for commercial usage
- Flats with up to four (four) stories
- Flats of more than four (four) stories
The decreased prices are effective from the date of notification, i.e., February 26, 2021, through September 30, 2021, for all categories listed above.
When the circle value is more than the agreed-upon sale price, the amount of stamp duty and registration costs is computed based on the circle value of the property. As a result, in such instances, the decrease in circular value by 20% provided in the notification above indicates that stamp duty due on immovable assets located in Delhi would also be lowered. The updated circular rates might result in a 20% decrease in stamp duty and up to a 20% reduction in registration fees for immovable properties in Delhi.
Due to market corrections, we discovered that houses in several Delhi neighbourhoods were selling less than the circular rate. This change would be very beneficial in such circumstances.
Before February 26 2021, the circle rate for 1000 sq metres’ category A’ immovable property (such as property in Golf Links, Delhi) was about INR 77,40,00,000 per sq metres. Still, from February 26 2021, to September 30 2021, the circle fee was lowered to INR 61,92,00,000. As a result, if the agreed consideration for the sale is less than 77,40,00,000, the compulsory stamp duty consequence will be greater than the agreed value or the revised circle rate, i.e., 61,92,00,000.
It is worth noting that capital gains and income tax liabilities are managed by the Tax Regulation, which is a centralised act that applies across India. As a result, the advantages indicated above in Part I shall apply mutatis mutandis to the State of NCT of Delhi.
The reduction above in circle rate and the stamp duty payable on transactions in respect of immovable properties located in Delhi is a purely temporary measure. The benefit in relation to the same would only accrue to all of those stakeholders who implement and register their instruments(properties) between February 26, 2021, and September 30 2021, similar to the case of benefits extended by the WB Government. Stakeholders are urged to execute and register their transferable instruments(properties) by September 30 2021, if the consideration is less than the former circular rates since the Delhi Government has not indicated that the aforementioned benefits would be extended beyond that date.
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Stamp Duty Reduction – Rajasthan
The state government’s plan to lower District Lease Committee (DLC) rates and stamp tax on housing units in multi-story structures (up to Rs 50 lakh) will help homebuyers, reviving the stagnant real estate market.
The CM stated that stamp duty on housing units in multi-storey projects will be reduced from 6% to 4% until June 30, 2021, in response to developer requests throughout the state. Buyers of flats priced up to Rs 50 lakh would be eligible for the rebate.
Builders, purchasers, and developers have also praised the state’s reduction of DLC prices. Although the stamp duty reduction is unlikely to impact market circumstances significantly, it is expected that aligning DLC rates with lower market rates will provide more power to make deals. In many regions, the government’s approach will also relieve capital gains tax for the whole industry, as property valuations are below DLC.
During the pre-budget conference, the real estate industry also urged a reduction in DLC rates, claiming that they had reached an all-time high in the previous six years.
The Confederation of Real Estate Developers’ Associations of India (CREDAI) has written to the finance ministry requesting the stamp duty exemption be extended until March 2022. It was also declared in the state budget for 2021-22 by chief minister Ashok Gehlot.
The CM had declared that stamp duty reduction on housing units in multi-storey projects will be reduced from 6% to 4% until June 30, 2021, in response to developer demands.
Stamp Duty Reduction – Karnataka
The Karnataka government cut the guideline value of immovable properties across the state by 10% for three months starting January 1, 2022, as a New Year’s present, which is supposed to improve the economy and help the government recoup money lost due to the COVID-19 epidemic.
On December 8, 2021, an assessment of the Department of Stamps and Registration’s activities revealed a revenue collection gap of Rs 2,021 crore for 2019-20. The department requested the government to loosen the guideline value by 10%, based on the Delhi government’s decision to stamp duty reduction by 20%, which increased income generation. On Saturday, Ravindra PN, the Inspector-General of Registration and Commissioner of Stamps, issued the order.
According to Ravindra PN, the head of the Central Valuation Committee for Estimation, the regulation would be in place for three months. For properties in Bengaluru Urban, Rural, and Ramanagara districts, the guideline value was changed on January 1, 2019, whereas it was altered earlier for other districts on December 5, 2018.
For example, the buyer had to pay Rs 5,000 for a property with a previous guideline value of Rs 1 lakh and stamp duty of 5%. He would now have to pay Rs 4,500 because the guideline value and stamp duty reduction has been reduced by 10% to 90,000, saving him Rs 500.
Stamp Duty Reduction – West Bengal
Finance Minister of West Bengal, in his budget statement on July 7 2021, announced that the government is allowing relaxation to the registrant public of the state. A 2% stamp duty reduction was offered for the registration of deeds that affect the sale or lease of the property from the present rate of that time. A 10% reduction in circle rates was also offered to register the immovable property. These benefits were given to the citizens who completed the registration procedure before October 31 2021.
West Bengal announced that the Finance Department of the WB Government had declared a temporary decrease of 10% in the circle rate/IGR rate of all immovable properties within the State of West Bengal. The new circle rate/IGR rate has been amended in the Directorate’s records, according to Order No IGR/115/2021.
Furthermore, the Directorate, the IGR, and the Commissioner of Stamp Revenue, West Bengal, in their Order No IGR/116/2021 dated July 9 2021, stated that the WB Government had declared a 2 per cent stamp duty rebate for all documents for which stamp duty is charged under Article 23 (Conveyance) of Schedule IA of the Indian Stamp Act, 1899 (as applicable to West Bengal), except the document of ‘amalgamation of contiguous land’ for a temporary period. According to the stated Order No IGR/116/2021, the WB Government’s e-nathikran system of registration is being updated with the new stamp duty rates.
According to the Minister’s budget announcement, a 2% stamp duty reduction discount on the current rate of stamp duty is being offered on all immovable property transactions.
In one of our transactions, we saw that any immovable property valued at roughly INR 4,00,00,000 on the Directorate’s website before July 8 2021, was evaluated at around 3,60,00,000 on July 9 2021, indicating a market value reduction of 10%.
Furthermore, we have noticed that a sale transaction that would have been subject to a stamp duty of 7% on the market value before July 8, 2021, would now be subject to a stamp duty of just 5% as of July 9, 2021.
As a result, it appears that the WB Government has already implemented the above-mentioned market value and stamp duty rate refunds.
This mentioned market value decrease will assist both transferors and transferees with respect to income taxed as capital gains (Capital Gains).
Transferor’s capital gains tax relief: The value of the property approved by the stamp valuation authority for payment of stamp duty circle rate is in respect of any asset transfer shall be the value used to calculate Capital Gains, according to the Income Tax Act, 1961 (“Tax Act”). As a result, if the consideration value of a transaction is less than the fair market value of the immovable property, a 10% reduction in the fair market value would result in a lower Capital Gains obligation for the transferor of the immovable property.
The difference between these values is deemed to constitute the individual’s income, subject to specific restrictions as defined by the Tax Act, from time to time when any person purchases an immovable property for a lesser consideration than the circular rate. As a result, a 10% fall in the fair market value would result in a lower considered income for the transferee and a lower tax burden.
It is essential to note that the above-mentioned stamp duty reduction in circle rate and stamp duty payable on transactions involving immovable properties in West Bengal is a purely temporary measure, and the benefit will only be available to those stakeholders who execute and register their instruments between July 9, 2021, and October 30 2021.
As a result, stakeholders wanting to take advantage of such benefits are urged to sign and register their transferred instruments by October 30 2021. There is no indication from the WB Government that the aforementioned benefits would be extended beyond October 30 2021.
The West Bengal government has agreed to levy stamp duty reduction rates till the end of March 2022, which would significantly stimulate the residential property market in Kolkata.
The third extension follows an epidemic of Omicron across the country, which resulted in a state-by-state shutdown. The 2-percentage-point stamp duty reduction and 10-percentage-point reduction in circle rate, aimed to increase demand for residential real estate, was expected to extend until January 2021.
FAQ’s about Stamp Duty Reduction
Q1. How can I reduce stamp duty on my property?
The only way to go for stamp duty reduction on your property is by registering the property in a woman’s name. Some states charge 2% to 3% on stamp duty, while some states make stamp duty free for the women owners.
Q2. Is stamp duty reduced in India?
Stamp duty reduction is still applicable in some parts of the country, while some had offered reduced stamp duty but not any more, and some are still planning to reduce stamp duty.
Q3. What states have reduced stamp duty?
Maharashtra, Karnataka, West Bengal, Delhi, Rajasthan are some Indian states which have reduced their stamp duty charges.
Q4. What happens if you pay incorrect stamp duty?
If the stamp duty is paid incorrectly, the defaulter will have to pay a fine or be imprisoned, depending upon the severity of their fault.
Q5. Can the stamp duty amount be added to the mortgage?
Yes, adding the stamp duty charges to the mortgage is possible. Adding it to the mortgage will incur interest for the mortgage repayment period. The addition also affects the loan-to-value (LTV) of the borrower.
Q6. Is it possible in any way to avoid stamp duty on the second home?
Yes, it is possible to avoid stamp duty on the second home. If the home is bought for a family member, then put the mortgage and a deed in their name. This will help avoid stamp duty on the purchase of a second home.
