You are reading a newspaper on a Sunday morning sipping a nice cup of tea. You see a couple of ads for new residential projects in the locality you are interested in. You decide to go visit the site and like the project. But before finalising the flat of your choice, you want to know what are the costs associated with buying a home….
Well, you’ve come to the right place!!
Apart from the price of the flat and associated charges such as parking etc. , there are the government charges that have to be paid in order to legally complete the transaction as well as get the property transferred to your name.
Let’s get straight to it. What are the costs of buying your dream home?
- Stamp duty
- Registration fee
- GST (Goods and Service Tax)
According to Stamp act of Maharashtra 1958, to transfer any type of property from one entity to another, a certain amount of tax has to be paid to the government. This tax is known as stamp duty. This can be paid directly to the stamp vendor at the time of registration of agreement to sale with the developer. Or if it’s included in the price of the flat, the developer will take care of the stamp duty for you. Currently, the rate for stamp duty in Maharashtra is 6% of the value of flat. This may vary from city to city. For example, in Mumbai the stamp duty is 5% of the value of the flat.
This stamp duty can be paid by directly transferring the amount to the account of a trusted, known stamp vendor for your safety. Or you can pay it online at following link : Maharashtra Stamp Duty Online Payment Portal. The stamp papers have to be in the name of the buyer or their attorney if they prefer.
Registration fee for registering the document at the sub-registrar’s office is 1% of the value of flat. This is applicable for value of flats upto ₹ 30 lakh. For value above that, the registration fee is capped at ₹ 30 thousand by the government. Registration fee can also be paid at the same portal as above.
GST (Goods and Service Tax)
Goods and Service Tax regime was implemented by the government on 1 July, 2017. GST replaced a myriad of state and central taxes such as sales tax, VAT, luxury tax, excise duty, customs duty, etc.
The implementation of GST was made to make the government’s dream of ‘housing for all by 2022’ come true. Initially, the rates of GST were 12% with ITC for residential and commercial property. But later on, after April 2019, the rates were slashed in order to increase the affordability of housing and reduce the costs of buying. The current rates for GST are 1% for affordable housing and 5% for non-affordable housing.
Affordable housing in this case means any house that has its RERA carpet area below 90 sqmt and the value of the house shall be below ₹45 lakh. Any house violating either of these criterion will attract GST of 5% on the total value. This criteria is different for metropolitan cities.
The buyer doesn’t have to pay GST at any government agency or portal. The GST is to be paid to the developer only.
These are the government related costs of buying a property. You should get receipts for these costs.