When a property is purchased or transferred, buyers are required to pay a certain percentage of its value as stamp duty. This payment serves as proof of registration and ownership transfer, making it admissible in court. According to Section 80C of the Income Tax Act, homebuyers can claim a deduction of up to INR 1.5 lakh on property transactions, which includes stamp duty and registration fees . This deduction can significantly relieve the financial burden on buyers, making it a crucial consideration when purchasing property.

Today, we’ll explore how to claim a tax exemption on stamp duty and the key conditions that impact the eligibility for this benefit.

How to Claim Stamp Duty Exemption on Property

Follow this step-by-step guide to claim a tax exemption on stamp duty:

• Ensure you meet the eligibility criteria before applying for tax exemption on stamp duty. Women buyers, first-time home buyers, and individuals purchasing properties below a certain price range often qualify for stamp duty reduction.
• Collect all essential documents, including property papers, stamp duty payment receipts, and other supporting records. They will be vital for substantiating your claim when filing for the exemption for stamp duty.
• Fill out the tax return forms carefully and specify the total amount paid towards stamp duty. Make sure to mention the specific sum eligible for tax exemption under Section 80C. Double-checking your entries can help you avoid errors that might unnecessarily delay the processing of your exemption for stamp duty.
• After completing the forms, submit your tax return along with the required documents.

After submission, track the status of your stamp duty tax exemption application routinely. Staying informed can help you address any queries or provide additional information if required.
Note: It’s important to check the specific conditions applicable in your state or region, as they can vary.

Conditions for Income Tax Exemption on Stamp Duty

The following conditions apply for filing an exemption on stamp duty:

• Ownership Requirements: To avail of a stamp duty exemption, the applicant must be an individual property owner, a co-owner, or a member of a Hindu Undivided Family (HUF) that has purchased a property.
• Under-Construction Properties: Individuals who pay stamp duty on properties that are still under construction can claim the deduction only after the construction is completed and they have taken possession of the property.
• Lock-In Period: Selling the property within 5 years of its purchase will reverse the previously claimed tax exemptions and get added to the seller’s taxable income. Therefore, to maintain the tax benefits, the property must be held for longer than this period.
• Eligible Properties: Only residential properties are eligible for a tax exemption on stamp duty. Such properties should be newly purchased and must not include any commercial plots.
• Timing: Property owners must claim tax benefits the same financial year they pay stamp duty. For instance, if you pay the stamp duty on 26 May 2024, the exemption can be claimed for the financial year 2024-2025. Deductions for stamp duty payments made in previous tax years will not be approved.

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Conclusion

Understanding how to claim stamp duty and registration charges in your ITR (Income Tax Return) can help you take advantage of available exemptions and reduce taxable income. It is crucial to stay informed about the state-wise eligibility criteria and regulations to maximise the benefits.

For aspiring homeowners, being aware of stamp duty expenses and potential exemptions provides a clearer picture of the overall cost of homeownership. To support your ambition, SMFG Grihashakti offers home loans of up to 90%* of the property’s value with interest starting at just 10%* per annum. Apply online for a quick and convenient experience or visit your nearest branch for more details.