While buying a house, the physical transfer of the property is not enough. One also needs to have legal ownership. At the time of registration, one is liable to pay a stamp duty which is a government tax levied on property transactions.
What is stamp duty?
It is a tax, similar to income tax, collected by the government. Stamp duty is payable under Section 3 of the Indian Stamp Act, 1899. Stamp Duty must be paid in full and on time. If there is a delay in payment of stamp duty, it attracts penalty.
Why one should pay stamp duty?
A stamp duty paid instrument / document is considered a proper and legal instrument / document and has evidentiary value and is admitted as evidence in courts. Document not properly stamped, is not admitted as evidence by the court.
How to pay stamp duty?
Many states have simplified the payment procedure. For example in Maharashtra, one can pay the stamp duty online as the government has recently announced linking of all sub-registrar offices across the state for easy payment. Otherwise, stamp papers, equivalent to the value of the stamp duty, should be purchased in the name of one of the parties involved in the transaction. The amount will be paid at the sub-registrar office of the jurisdiction on or before the execution of the sale deed.