Is deduction allowed for stamp duty & registration charges?

It’s very burdensome to pay Stamp duty and registration charges on a newly acquired/constructed house property. Undoubtedly it’s very expensive affair to buy a house property. Besides this we have to pay the stamp duty and registration charges. It could be 8 to 10% of the value of property bought, the stamp duty and registration charges together.

When you purchase a house property or construct a house property then Stamp Duty & Registration Charges along with other expenses which are directly related to the transfer are allowed as a deduction under section 80C of income tax act 1961.

But, the deduction is available if such expenses have been incurred in respect of a new house property.

As per the provisions laid down in section 80C (2) (xviii) (d) of the Income tax Act, 1961 deduction in respect if stamp duty, registration fee and other expenses for the purpose of transfer of house property is allowed only if they are paid for the purpose of purchase or construction of a residential house.

Maximum amount of deduction ?

From the financial year 2014-15 An individual can claim tax deductions of up to Rs 1,50,000 under 80C. As this deduction is covered under 80c the threshold limit of 150000 comes into picture. As this limit was extended by Finance minister Arun jaitely in the Union budget of 2014-15 , the amount of deduction that one can claim maximum is 100000 for the years previous to 2014-15 financial year.

It’s a payment based deduction :

This is a payment based deduction …means deduction in respect of stamp duty and registration charges is allowed only if the payment is actually made. Otherwise deduction is not allowed. If you want to claim deduction u/s 80c for these, then you should have paid the stamp duty and registration charges without having any dues.

Important points to be considered :

1. This deduction is available to the assessee only after actual possession of the house property. Otherwise it’s not allowed.

2. As said above payment should be made by the time one supposed to claim deduction.

3. For commercial house properties it’s not available. This deduction is available only for the purchase of new residential house property and not commercial property.

4. The house property in respect of which assessee claims deduction should be registered under the name of the assessee only.