Is deduction allowed for stamp duty and registration charges?

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A frequent query people have. Can Stamp Duty and Registration charges be claimed under Section 80C of the Income Tax Act, 1961. Before answering this question let us comprehend what these charges essentially are.

Stamp Duty is the tax that is paid on the Market Value of the House. This tax is mandatory and is levied by the Government of India. It is however different for different locations, Mumbai being the highest because of its elevated property prices. The Stamp Duty is a whooping 5% of the property value. Registration Charges are a meagre 1% of the property value. This payment entitles you to a legal right to the property. Thus the final total value of the property is a lot more than the original price of the house.

After spending so much, you do want some sort of relief on your bank account right? Yes, stamp duty and registration charges can be claimed as a deduction under section 80C of the Income Tax Act, 1961. This is applicable for an individual or a Hindu Undivided Family (HUF). The limit under section 80C has now been raised to
1.5 Lakhs.

The expense should be claimed as a deduction, only in the year it is actually paid. To receive this benefit the construction of the property should be complete and you should have the possession of the house. If the property is purchased jointly, the owners can claim the expense, as a deduction in their income tax returns based on their share in the property.

So next time you buy a house, make sure to keep the above in mind. Don’t go for an expensive house just because you feel you may save some money on the deduction. The proportion spent on the house is a lot higher.

To calculate your stamp duty, click here: Stamp Duty Calculator

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