Is Stamp Duty Payable on Power Backup and IFMS Charges in a New Inventory Agreement?

Ans: When purchasing a flat, there are several components to consider regarding the total cost. One key aspect is the registration of the property, where stamp duty plays a crucial role. Let me break it down for you in simple terms.

What is Stamp Duty?

Stamp duty is a tax levied by the government when you register your property. It is a mandatory payment and is calculated based on certain aspects of the property’s value. This tax is essential for the legal ownership of the property to be transferred to your name.

What Does Stamp Duty Cover?

When it comes to calculating stamp duty, the primary focus is usually on the value of the property. However, there is a distinction to be made between the land value and other charges. Let’s clarify:

Stamp duty is typically levied on the circle rate or agreement value of the property, whichever is higher.

Power backup, IFMS (Interest-Free Maintenance Security), and other charges are considered additional costs. These are generally not included in the base value for stamp duty calculations. So, stamp duty is not typically calculated on these charges.

However, certain states may have different rules, and there can be variations. It is crucial to check the local state laws where the property is being registered.

Land Value vs. Total Cost

The stamp duty is mainly applied on the land value or property value as per the market or circle rate.

Other charges, such as power backup, IFMS, or club membership fees, are often part of the overall deal but are not counted toward stamp duty.

However, it’s essential to ensure all these costs are clearly mentioned in your sale agreement. A professional legal consultation can help avoid any surprises.

State-Specific Rules

Each state in India has its rules for stamp duty calculation. The stamp duty rate may vary depending on:

Location of the property (urban or rural)
Type of property (residential or commercial)
Gender of the buyer (some states provide concessions for women buyers)
It’s advisable to check with the sub-registrar’s office or consult a local certified financial planner or legal expert who can guide you on state-specific regulations.

Final Insights

In most cases, stamp duty is calculated based on the property value, excluding charges like IFMS and power backup. But ensure all the components of the deal are clearly laid out in the agreement to avoid any confusion during registration.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment