February 23, 2024

Reduced stamp duty rate in West Bengal

Home-buyers in Bengal have been treated to a second bonanza in the space of a few months in terms of stamp duty obligations. After extending the existing rebate in stamp duty for registration of properties and circle rate till June 2024 last September, the state has now capped stamp duty at Rs 1000 regardless of the circle rate value on the property if the transfer is a gift within the family.

The flat-rate relief for intra-family transfer of properties was proposed in the state Budget tabled recently. Till now, any transaction of property within the family entails a special stamp duty rate of 0.5% of the prevailing circle rate value. Industry experts have hailed this move as beneficial to everybody, making gift-deed property transfers far simpler than before.

Elderly members of most families owning immovable property like a flat, house or land parcel would like to gift it to a family member – son, daughter, spouse, daughter-in-law, grandchild, or a sibling. This latest move for a uniform stamp duty cap for any location would be a huge plus for these people. Just to illustrate the point, while the circle-rate value of a certain property valued at Rs 2 crore would have meant a stamp duty payout of Rs 1 lakh, it would now come to a mere Rs 1000.

When a family elder does succession planning, there are usually two routes – draw up a will or write a gift deed. The latter is often the preferred choice, because albeit a will doesn’t entail any stamp duty, there are legal complexities involved. For instance, there could be legal challenges and dispute over the property among family members themselves, or some other roadblock during execution of the will.

The blanket stamp duty discount was first declared in the July 2021 state budget at the beginning of the third term of the ruling regime. The idea was to offer some leeway to home-buyers ravaged by the pandemic and also with an eye to boosting market sentiment and creating fresh employment at a time when so many jobs were lost. Since the first announcement, the sop period has been extended a few times and according to market sources, in the Kolkata Metropolitan Area itself, over 100,000 properties have been registered during this period.

Factors influencing stamp duty in West Bengal:

# Location of the property: Stamp duty and registration fees are higher in cities than in rural areas. Hence, the same property valued at Rs 1 crore will attract a stamp duty plus registration fee of 5% in rural areas and 6% in urban precincts.

# Value of the property: While properties going up to Rs 1 crore entails stamp duty and registration fee of 5% and 6% in rural and urban areas, respectively, for a property worth Rs 2 crore, the rates would spike to 6% and 7%, correspondingly.

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