Mumbai city is a prime real estate market. The influx of urbanisation, commercial and professional opportunities, hubs for multi-national businesses and improving connectivity become factors in pushing the property margins up. With land becoming a scarcer and more valued commodity, every sale or purchase is a significant contribution to the revenues of the government of Maharashtra.

Two of how the government earn with the sale of properties are stamp duties and registration charges. Take for example what occurred in 2020. When the real estate industry faced a slump, the Maharashtra Government reduced stamp duty charges from 5% to 2%. This led to a boost in property sales.

For a home buyer in Mumbai, in addition to the two fees, they have to pay an additional 1% extra stamp duty in the form of a metro cess tax. In total, this raises the tax to up to 6%.

Understanding Registration Charges

Registration charges are the fees paid for registering the property under the buyer’s name. This process provides legal sanctity to the property transaction.

Understanding Stamp Duty in Mumbai

Stamp Duty functions as a property tax where a tax is imposed by the state government on purchasing a property. Maharashtra pays some of the highest stamp duties in the country. To understand the amount you would have to pay in duties is dependent on several factors, including:

Property type: The tax applicable to commercial properties exceeds that of residential homes as commercial properties include several additional features and amenities compared to a residential property.

Location: The property’s geographical location significantly influences the tax charges, with rural and semi-urban areas generally incurring lower stamp duty and registration charges in Pune.

Market value: The calculation of current stamp duty and registration charges takes into account both the total area and the market value of the property.

Owner’s age & gender: The government extends additional concessions based on the age and gender of the property owner. Senior citizens and women may qualify for subsidized stamp duty and registration charges as part of these concessions.

First-time home buyers: Individuals buying a home for the first time are eligible for a maximum of Rs. 2.5 lakh exemption on their stamp duty.

Ready reckoner rate: Also called a circular rate, the ready reckoner rate also influences the stamp duty calculation. These rates depend on the area and restrict the sale of a property below a specific amount.

The Maharashtra government has given special consideration to investors looking to invest in properties in Mumbai by extending the stamp duty waiver for up to 3 years. They now have the opportunity to receive a waiver on stamp duty for resales made within three years of acquiring their property. In these transactions, the stamp duty applies only to the price difference of the property, rather than the entire amount.

For farmland, agricultural land, or residential property, the stamp duty for a gift deed passed on to family members is Rs 200, while for non-family members, the stamp duty is three per cent of the property cost.

Members of housing societies looking to undergo redevelopment are not required to pay stamp duties. At most, they will be required to pay Rs. 100 while the conveyance deed between the developer and the housing society will remain in effect.

Stamp Duty and Registration Fees for 2023–2024

Depending on the location of the property, the duties vary. For areas in gram panchayat regions, the taxes cost 3% of the market value, whereas the municipal regions of urban areas come to about 5% of the market value.

The Maharashtra Government charges a fixed amount of Rs. 30,000 if the retail value of a property is above Rs 30 lakh. However, if the property costs below Rs. 30 lakh, the registration charge is 1% of the property value.

The existing stamp duty rates stand at 5% for men and 4% for women, while registration fees are set at 1% of the property value. In Mumbai, the stamp duty is elevated at 6%, accompanied by registration charges of 1% of the property value.

While these are the current trends observed, the rates can change depending on the ongoing conversations around the cess charges and the appeals for its withdrawal from citizens and realtors as it places further strain on both.