Stamp Duty Determination Guidelines for Mumbai Properties

Officials in Mumbai have clarified fifteen criteria in assessing Stamp Duty on a real estate transaction. Before this, the revenue officials were using arbitrary measures to come up with a number.

Here are those fifteen parameters.

1. Property will be more valuable if it is close to railway station, a bus stop, a market, multiplex.

2. Property close to the sea will cost more – due to cleaner air and sea breeze.

3. If the property is closer to crematoria or other polluting units, then the property will cost less.

4. If the title is disputed, then property value will be lower.

5. If the property is closer to schools or gardens then will cost more.

6. Uninterrupted supply of water, power, proper sewage service would add to the value of the property.

7. Higher the Floor Space Index (FSI), higher the value of the property.

8. The property is more valuable if it on a level land instead of a hilly area.

9. If the property is free of debt then the stamp duty will be higher.

10. If the property is well connected with the approach roads, then the value of the property will be considered higher.

11. Clear view of the surroundings will add to the value of the property.

12. Ownership property will be more valuable that leased.

13. Properties on irregular shaped parcels will cost less.

14. non-agricultural land will cost more.

15. smaller plot will be proportionately cheaper than the larger plot.

Property value determination is important because in Mumbai the Stamp Duty  is nearly 5% of the higher of property value or the market value.

 

 

 

Purchasing Property: Stamp Duty

Stamp Duty is a tax, similar to income tax ans sales tax, collected by the government. The stamp duty is paid by the buyer of the property. It is payable on the market value of the property or the agreement value, whichever is higher.

The purchase agreement of a property does not become legal until it is executed by the government, for which a stamp duty is paid. Only the instruments that are properly stamped can be admitted as evidence in court.

Value of stamp duty is fixed by the government and varies from locality to locality. It is calculated per spare feet. The government assesses the market value of the property every year. The revised rate fixed by the state government is published in the Ready Reckoner. It is applicable since Jan 1, 2007.

Stamp duty is payable before or on the day of execution of the document, or on the next business day. Any delay attracts penalty at the rate of 2% a month on the deficit amount of the stamp duty. The maximum penalty is 200% of the deficit amount of the stamp duty.

In Mumbai that means an additional cost of 5% on the property/market value, whichever is higher. A similar chart exists for lease agreements.