Buying a property in India involves more than finalising paperwork, transferring funds, and collecting the keys. A significant part of the process includes paying various taxes levied on property transactions. Many buyers focus only on stamp duty and registration fees, but there are several other tax components that directly influence the total cost of ownership.
1️⃣ Stamp Duty
Stamp duty is a compulsory tax imposed by the State Government to authenticate a property transaction. This fee is paid at the time of registration, and the rate varies across states.
Key highlights:
- Generally ranges between 5–7% of the property’s value
- Varies by state, location, type of property, and sometimes even the buyer’s gender
- Calculated on the higher value between the market rate and circle rate
Stamp duty legally validates the transaction and forms one of the largest components of the home-buying cost.
2️⃣ Registration Charges
Registration charges are paid to the Sub-Registrar’s Office to officially record the Sale Deed in the buyer’s name. Only after registration is the buyer considered the legal owner.
What you need to know:
- Usually 1% of the property’s sale value
- May slightly vary by location
- Applies only to the final Sale Deed (not agreements like MoU or Agreement to Sell)
Property registration gives you a legally recognised title and protects your ownership rights.
3️⃣ Goods and Services Tax (GST)
GST on property applies only to under-construction homes. Fully completed or resale properties with an Occupancy Certificate (OC) or Completion Certificate (CC) are exempt from GST.
Current effective GST rates:
- 5% for under-construction residential units (non-affordable)
- 1% for affordable housing (costing up to ₹45 lakh and meeting area criteria)
- No GST on ready-to-move or completed projects
- Ancillary charges, such as maintenance, club fees, or parking—if billed separately—may attract 18% GST
GST significantly affects the upfront cost of buying under-construction property, so buyers must account for it in advance.
4️⃣ Tax Deducted at Source (TDS)
TDS applies when purchasing a property priced above ₹50 lakh. Under Section 194-IA of the Income Tax Act, the buyer must deduct 1% TDS on the transaction value (or circle rate, whichever is higher) before paying the seller.
Important points:
- Buyer is responsible for deducting and depositing TDS
- Not applicable for agricultural land
- TDS payment generates a certificate (Form 16B), which the buyer must give to the seller
Failing to deduct TDS can result in penalties, so compliance is essential.
🧾 Key Takeaway
Property ownership comes with tax obligations that can significantly affect your finances. Since these charges are not covered by home loans, buyers should plan ahead to avoid last-minute financial stress. Understanding stamp duty, GST, TDS, and registration fees ensures a smoother buying experience and more accurate budgeting.
❓ Frequently Asked Questions (FAQs)
GST is not applicable on ready-to-move or completed properties.
For under-construction residential properties:
- 1% for affordable housing
- 5% for non-affordable housing
The buyer must deduct TDS at 1% when the property value exceeds ₹50 lakh and deposit it with the government. The seller receives the amount net of TDS.
The buyer must deduct TDS at 1% when the property value exceeds ₹50 lakh and deposit it with the government. The seller receives the amount net of TDS.
TDS cannot be avoided if the property value is ₹50 lakh or above. The only legal way to avoid TDS is to purchase a property valued below ₹50 lakh.
To estimate your total property tax cost, add:
- Stamp duty (5–7%)
- Registration fee (1%)
- GST (1% or 5% for under-construction only)
- TDS (1% if property value is above ₹50 lakh)
Your state’s circle rate and project status also influence the calculation.
Buy a ready-to-move-in property with an OC/CC, or purchase a resale property—GST is not applicable in either case.
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