Everything you Need to Know About Tax Benefit on Stamp Duty and Registration Charges
Apr 09, 2020 Home Trading Steps
When you buy a property, you have to pay the stamp duty and registration charges as well. These two significantly increase the cost of the property as the stamp duty applicable across the country varies between 4 percent to 10 percent while the homebuyer has to pay 1 percent the cost of the property as the registration charges. It the responsibility of the buyer to pay these charges as the banks only pay 80 percent the total cost of the property. Rest 20 percent including stamp duty and registration are to be paid by the home buyer from their pocket.
There are some relaxations provided under the Income-tax laws for the homebuyers on the stamp duty and registration charges paid. We discuss everything below:
1. Sections under which the deductions can be claimed:
Under Section 80C of ITA, 1961, the deduction on stamp duty and registration charges can be claimed. However, the overall deduction in Section 80C is Rs 1.50 lacs including PF, PPF, life insurance, home principal, etc. The homebuyer can not only claim for a deduction for the principal amount paid but also the stamp duty and registration charges.
Under the law, homebuyers (including the buyers under the HUF plan) can claim the benefit of the deduction for the stamp duty and registration charges.
2. Conditions to claim the deduction:
There are certain conditions that the buyer has to fulfill to claim the deduction for the stamp duty and registration charges:
There are some relaxations provided under the Income-tax laws for the homebuyers on the stamp duty and registration charges paid. We discuss everything below:
1. Sections under which the deductions can be claimed:
Under Section 80C of ITA, 1961, the deduction on stamp duty and registration charges can be claimed. However, the overall deduction in Section 80C is Rs 1.50 lacs including PF, PPF, life insurance, home principal, etc. The homebuyer can not only claim for a deduction for the principal amount paid but also the stamp duty and registration charges.
Under the law, homebuyers (including the buyers under the HUF plan) can claim the benefit of the deduction for the stamp duty and registration charges.
2. Conditions to claim the deduction:
There are certain conditions that the buyer has to fulfill to claim the deduction for the stamp duty and registration charges:
- Applicable to individuals and HUF: The buyer must be an individual or a part of HUF.
- Personal funds: The deduction if applicable if the buyer has paid the stamp duty and registration charges from their savings and funds. The amount shouldn’t be borrowed.
- Only one time: The buyer can only claim the benefit once in the year property has been purchased. The benefit cannot be claimed after or before the purchase.
- Only for construction and purchase: The benefit is only applicable to the purchase of the property or construction. The benefit is not applicable to the renovation or purchase of land or plot.
- Joint owners: If the property is purchased jointly then the owners can individually claim the benefit.
- New property: The offer is only applicable if the property is newly built and not a resale. According to the law, if the changes have been made in the property after receiving the completion certificate then it cannot be considered for rebate.
FAQs regarding the tax rebate applicable on the stamp duty and registration charges
1. Is rebate applicable if the stamp duty is paid for the construction of the house? Yes, the tax rebate is applicable for the construction of the house on a plot of land.
2. Is rebate applicable for the plot purchase? No, the rebate is only applicable for the construction and purchase of the property.
3. Joint owners can enjoy the benefit? Yes, the joint owners can individually claim the benefit of the stamp duty and registration charges paid.
4. What do other services mean when offering tax rebate on stamp duty and registration charges? Other services include the legal expenses incurred by the buyer while purchasing the property.
5. Is the rebate application for the construction of the house on a plot? Yes, if the loan is taken of the construction of the property on a plot the rebate is applicable.
1. Is rebate applicable if the stamp duty is paid for the construction of the house? Yes, the tax rebate is applicable for the construction of the house on a plot of land.
2. Is rebate applicable for the plot purchase? No, the rebate is only applicable for the construction and purchase of the property.
3. Joint owners can enjoy the benefit? Yes, the joint owners can individually claim the benefit of the stamp duty and registration charges paid.
4. What do other services mean when offering tax rebate on stamp duty and registration charges? Other services include the legal expenses incurred by the buyer while purchasing the property.
5. Is the rebate application for the construction of the house on a plot? Yes, if the loan is taken of the construction of the property on a plot the rebate is applicable.
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